Customer Revenue
Average revenue per user per month.
2026 SaaS median: 70-80%.
Lifespan = 1 / Monthly Churn Rate. 3.3% monthly churn = 30 months.
Customer Acquisition Cost
Monthly or quarterly total spend.
In same period as spend above.
Your Results
Enter revenue and acquisition data to calculate.
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What This Calculator Does
This LTV to CAC ratio calculator computes the relationship between customer lifetime value and customer acquisition cost, the two most important unit economics metrics for any subscription or recurring revenue business. It calculates LTV from monthly ARPU, gross margin, and customer lifespan, then divides by CAC to produce the ratio and payback period with 2026 SaaS benchmarks.
The Formula
LTV represents the total gross profit a customer generates over their entire relationship. It uses gross margin (not revenue) because only the margin after direct costs contributes to covering acquisition costs and generating profit. CAC is the fully loaded cost to acquire one new customer, including all sales and marketing expenses. The ratio tells you how efficiently you convert acquisition spend into long-term value. Payback period shows how many months until a customer "pays back" their acquisition cost.
Step-by-Step Example
Calculate LTV
ARPU: $120/month. Gross margin: 75%. Lifespan: 30 months. LTV = $120 x 75% x 30 = $2,700.
Calculate CAC
Sales + marketing: $50,000/month. New customers: 100. CAC = $500.
Calculate ratio and payback
LTV:CAC = $2,700 / $500 = 5.4x. Payback = $500 / ($120 x 75%) = 5.6 months.
Interpret results
5.4x ratio is excellent (target: 3x+). 5.6-month payback is healthy (target: under 12 months). Net LTV after CAC: $2,200.
Real-World Use Cases
Growth Investment Decisions
A high LTV:CAC ratio (above 5x) may signal underinvestment in growth. You could spend more on acquisition and still maintain healthy economics.
Channel Optimization
Calculate LTV:CAC by acquisition channel to identify which channels deliver the most efficient growth and reallocate budget accordingly.
Fundraising and Board Reporting
LTV:CAC is one of the first metrics investors evaluate. Demonstrating a ratio above 3x with a payback under 18 months validates your business model.
Common Mistakes to Avoid
Using revenue instead of gross profit for LTV. A $100/month customer with 60% margin has a very different LTV than one with 85% margin.
Not including all acquisition costs in CAC. Include salaries, commissions, tools, content production, ad spend, events, and allocated overhead for sales and marketing teams.
Using the same CAC for all channels. Organic, paid, and partner channels have very different CAC. Blended CAC masks channel-level inefficiencies.
Calculating LTV from average lifespan without segmenting. Enterprise customers may have 5x the lifespan of SMB customers, skewing the blended average.
Frequently Asked Questions
Accuracy and Disclaimer
LTV and CAC calculations are based on the inputs provided. Actual customer lifetime and acquisition costs vary by segment, channel, and cohort. Use cohort-level analysis for more precise unit economics. This calculator provides directional guidance, not financial projections.
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