Step 1: Lifetime Value
Customer revenue metrics
Lifetime Value Inputs
500100,000
1/year24/year
6 months120 months
20%95%
Excellent Efficiency
Benchmark: 3:1 healthy, 5:1 excellent
LTV:CAC Ratio
14.0x
Benchmark: 3:1 healthy
Customer LTV
$126,000.00
Gross margin adjusted
Customer CAC
$9,000.00
Fully-loaded cost
Payback Period
3 months
Target: <12 months
CAC as % of LTV
7%
Lower is better
Max Allowable CAC
$42,000.00
For 3:1 ratio
LTV:CAC Health Gauge14.0x
1:12:13:15:1+
Related Calculators
Calculator Knowledge Base and Scientific Documentation
Quick Reference
Quick Reference
The Scientific Model
The Scientific Model
LTV:CAC Ratio Formula
Formula
Why this approach:
People Also Ask
People Also Ask
- What is a good LTV:CAC ratio?
- A ratio of 3:1 is generally considered healthy for B2B SaaS. This means you earn $3 for every $1 spent on acquisition. Ratios above 5:1 indicate excellent unit economics.
- What does a low LTV:CAC ratio mean?
- A ratio below 2:1 indicates you're spending too much to acquire customers relative to their value. Either increase customer value through better retention/upselling, or reduce acquisition costs.
- How can I improve my LTV:CAC ratio?
- Focus on: (1) Reducing CAC through better targeting and conversion optimization, (2) Increasing LTV through reduced churn and expansion revenue, (3) Improving gross margins.