LTV:CAC Ratio Calculator
The LTV:CAC ratio is the ultimate unit economics health check. It tells you whether you earn enough from each customer to justify what you spend acquiring them — and whether you should invest more or less in growth.
LTV:CAC Ratio
3.5:1
Assessment
Healthy
Good balance of growth and profitability
Formula:
LTV:CAC Ratio = Lifetime Value / Customer Acquisition Cost
Benchmark:
3:1 is generally considered healthy for SaaS businesses
What's a Good LTV:CAC Ratio?
The magic number is 3:1 — for every dollar spent acquiring a customer, you earn three back over their lifetime. But context matters:
Under-investing
5:1+
You're likely leaving growth on the table
Healthy
3:1–5:1
Good balance of growth and profitability
Needs Improvement
1:1–3:1
Work on improving LTV or reducing CAC
Unsustainable
<1:1
Spending more to acquire than you earn
How LTV:CAC Ratio Is Calculated
LTV is the total gross profit a customer generates over their lifetime (ARPU × Margin / Churn). CAC is the fully loaded cost of acquiring one customer (total sales + marketing spend / new customers).
A high ratio isn't always better. If your ratio is above 5:1, you may be under-spending on acquisition and leaving growth on the table. The best companies find the sweet spot where they maximize growth while maintaining a 3:1+ ratio.
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