Customer acquisition (CAC)
Total sales + marketing spend for the period.
Customer value (LTV)
0%100%
0.1%20%
Churn can't be 0, enter at least 0.1%
See your LTV:CAC verdict
We'll benchmark your ratio, CAC payback and churn against SaaS standards.
LTV:CAC ratio calculator
Calculate CAC, LTV and churn side by side, benchmark against SaaS segment standards and see your CAC payback period.
The LTV:CAC ratio compares the lifetime value of a customer to the cost of acquiring that customer. You calculate it by dividing gross-margin-adjusted LTV by CAC, so a 3:1 ratio means every dollar spent on acquisition returns three dollars of gross profit over the customer's lifetime. It is the core unit economics number for any subscription business.
This calculator runs the full chain in one place. You enter acquisition spend, ARPA, gross margin and churn in one guided card, then hit Calculate to reveal the LTV:CAC ratio and CAC payback period, which update live as you adjust any input. Gross margin is required on the LTV side, so the ratio you read is contribution, not top-line revenue. Acquisition costs rose about 60% across B2B and B2C over the five years to 2020, so the ratio is worth getting right.
Cost to acquire (CAC)$1
Gross profit returned (LTV)$3
3:1gross profit per
acquisition dollar
acquisition dollar
How it works
How to use this calculator
The card walks through the inputs in order and feeds one shared result. Work through it top to bottom, or jump straight to the number you already know.
- CAC inputs. Enter your total sales and marketing spend and the new customers won in the same period. CAC is spend divided by customers. The spend basis switch separates blended CAC from paid-only.
- LTV inputs. Enter monthly ARPA, set gross margin with the slider (default 80%), and enter your monthly churn rate. LTV is ARPA times gross margin, divided by churn.
- Churn helper. If you do not know your churn rate, enter customers and MRR at the start of the month plus what you lost, then pick your benchmark segment. It works like a churn rate calculator, splitting logo churn from revenue churn and showing the compounded annual equivalent of each.
- Hit Calculate LTV:CAC. The ratio, a verdict, and your CAC payback in months slide in below the inputs and stay live as you change any field.
How is the LTV:CAC ratio calculated?
Three formulas drive the whole tool:
LTV = (monthly ARPA x gross margin %) / monthly churn rate
CAC = total spend / new customers
LTV:CAC ratio = LTV / CACThat is how to calculate customer lifetime value in its simple form, and it is the customer lifetime value formula most SaaS teams start with.
Gross margin is not optional here, and it is the step most calculators skip. Bill Gurley wrote in 2012 that the common LTV mistake is discounting revenue instead of marginal cash contribution. He noted that some companies use LTV math to justify spending 30 to 50% of revenue on acquisition, when the affiliate marketing norm is closer to 5 to 10%. Skip the margin step and an example like $150 ARPA times 20 months reads as $3,000 of LTV. Apply a 75% gross margin and the real contribution is $2,250, a quarter lower. This tool applies gross margin on every LTV calculation.
Churn is the other trap. Monthly churn does not multiply by 12 to reach an annual figure. It compounds: annual = 1 - (1 - monthly)^12. A 5% monthly churn is 46.0% annual, not 60%. Because LTV divides by churn, that overstatement flows straight into your ratio.
Gross LTV$3,000
Gross-margin-adjusted LTV (75%)$2,250
−$750
Benchmarks
What is a good LTV:CAC ratio?
- 3:1
- Minimum viability floor
- David Skok, SaaS Metrics 2.0
- 16 mo
- Median CAC payback, 2025
- Aleph + Benchmarkit, 342 companies
- <6 mo
- Top quartile payback
- Aleph + Benchmarkit
3:1 is the number everyone quotes, and it comes from David Skok's SaaS Metrics 2.0 framework around 2010. The commonly attributed backstory is that it reflects mature public SaaS companies at steady state rather than early-stage startups, though Skok's own page does not spell that out. What he did write is the detail almost everyone drops: 3:1 is a minimum viability threshold, not a target. In his own words, the number should be higher than 3. Clearing 3:1 means you cleared the floor. It does not mean you won.
A 5:1 ratio is not automatically good news. It can mean you are under-investing in growth and leaving demand on the table.
Be careful with any single median. Recent figures for the median LTV:CAC ratio benchmark vary across sources, roughly 2.5x to 3.8x, and the methodologies are rarely transparent. There is no one reliable current median, so treat a precise-sounding claim like "the median is 3.6:1" with suspicion. Skok's original above-3 minimum is the only threshold that holds up consistently.
The CAC payback period completes the picture
The ratio alone will not tell you whether you can afford your growth. You also need a short CAC payback period, and under 12 months is the common target. In the 2026 Aleph and Benchmarkit data across 342 companies, median CAC payback was 16 months in 2025, down from 18 in 2024, with the top quartile under 6 months.
Where does the simple LTV model fall short?
This calculator uses the flat LTV formula, the right starting point. It has real limits you should know before presenting the number.
No discount rate. The formula does not discount future cash to present value, so it overstates long-dated revenue. Skok's advanced version adds a discount rate and an expansion term for exactly this reason.
Blended churn hides cohort differences. One average churn rate assumes every cohort behaves the same. If your product improved, recent cohorts churn less than the blend implies, and proper cohort analysis will separate them.
No expansion revenue. The simple model ignores upsell and cross-sell. If your net revenue retention runs above 100%, your real LTV is higher than this shows. In the 2025 Benchmarkit data, median net revenue retention was about 101% while gross revenue retention was about 88%. Treat this ratio as a fast read on unit economics, not the final word.
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