Business
SaaS LTV to CAC Calculator
Estimate gross-profit lifetime value, acquisition cost, LTV-to-CAC ratio, and implied lifetime. The unit-economics visual traces one acquired account from CAC recovery through modeled gross-profit lifetime value.
Simplified gross-profit LTV-
Customer acquisition cost-
LTV-to-CAC ratio (x)-
Implied customer lifetime-
Decision view
SaaS unit-economics recovery path
SaaS unit-economics recovery pathCustomer acquisition cost is compared with monthly gross profit, implied lifetime, and simplified lifetime value.
Exact scenario comparisonMonthly customer churn (%) changes while all other entered assumptions remain constant.
| Monthly customer churn (%) | Simplified gross-profit LTV | Customer acquisition cost | LTV-to-CAC ratio (x) | Implied customer lifetime |
|---|
How to use SaaS LTV to CAC Calculator
- Use cohort ARPA and gross margin measured on the same customer definition.
- Match acquisition spend and new customers to the same period and attribution rule.
- Review payback, expansion, retention shape, and channel-level cohorts before scaling spend.
Calculator guide
Understanding SaaS LTV to CAC Calculator
SaaS LTV-to-CAC is a unit-economics screen, not a company valuation. The simplified inverse-churn model is useful only when revenue, gross margin, churn, and acquisition spending refer to a consistent customer cohort and period.
Calculation method
How the calculation works
Estimate gross-profit lifetime value from ARPA, gross margin, and inverse monthly churn, then compare it with acquisition spend per new customer. Multiply monthly revenue per account by gross margin, divide by monthly churn as a decimal for simplified LTV, and divide sales-and-marketing spend by new customers for CAC.
Unit economics
Read the ratio with its companion metrics
One attractive ratio can conceal slow cash recovery or weak retention.
Worked situations
Practical examples
- $120 ARPA at 82% margin produces $98.40 monthly gross profit per account.
- At 2.5% monthly churn, simplified LTV is $3,936 and implied lifetime is 40 months.
- $180,000 divided by 240 acquired customers gives $750 CAC and a 5.25x ratio.
Better inputs
Useful tips
- Use logo churn for account lifetime and revenue churn for revenue retention questions.
- Measure CAC by channel after assigning sales compensation and overhead consistently.
- Add CAC payback months because a high ratio can still consume too much cash.
Before relying on the result
Limitations and common mistakes
- The inverse-churn model assumes a stable geometric retention pattern.
- Expansion, contraction, reactivation, discounting, onboarding, support, and time-varying margins are excluded.
- Blended CAC can hide unprofitable channels or cohorts.
Reference
Key terms
- ARPA
- Average recurring revenue per account per month.
- Gross margin
- Revenue remaining after modeled cost of service.
- CAC
- Attributed sales-and-marketing spend per new customer.
- LTV-to-CAC
- Modeled gross-profit lifetime value divided by acquisition cost.
Important note
Calculated from the entered values using the displayed accounting method. Reconcile material decisions with source records and applicable accounting policy.
Frequently asked questions
Is 3x always a good LTV-to-CAC ratio?
No universal threshold fits every margin, cash cycle, risk, and growth strategy.
Why use gross margin?
Revenue used to deliver the service is not available to repay acquisition cost.
Can annual churn be divided by 12?
Not exactly. Convert between periodic retention rates multiplicatively.
Does the result include expansion revenue?
No. The simplified model keeps ARPA constant.