LTV:CAC Ratio Calculator
CAC alone is meaningless. LTV alone is a vanity number. The ratio between them is what tells you whether your growth is compounding or slowly bankrupting you.
Your numbers
Implies an avg. customer lifespan of 33.3 months.
Don't know this? Use the CAC calculator first.
Customer LTV
$2.3K
lifetime gross profit per customer
LTV : CAC ratio
3.9 : 1
3.9:1 — healthy
This is the range most SaaS benchmarks (Bessemer, David Skok's 'SaaS Metrics 2.0') treat as sustainable. You can likely defend or modestly increase acquisition spend.
Why this ratio, and not the raw numbers
A $2,000 CAC sounds expensive until you learn the customer generates $15,000 in lifetime gross profit — a 7.5:1 ratio most businesses would be thrilled with. A $50 CAC sounds cheap until you learn churn is so high that lifetime value is $40. Neither CAC nor LTV means anything in isolation; the ratio is the actual unit-economics signal, because it's the only version of the number that answers “does this customer relationship make money, and by how much margin of safety.”
The ratio isn't static — watch the trend
A single LTV:CAC snapshot is less useful than the trend over the last 4–6 quarters. Ratios compress as channels saturate and CAC rises, or as you move upmarket and churn improves. Run this calculation monthly with the same methodology and watch the direction, not just the absolute number.
Frequently asked questions
How do you calculate LTV?
LTV = (Average revenue per customer per month × gross margin) ÷ monthly churn rate. This gives lifetime gross profit, not lifetime revenue — the number that should actually be compared to CAC, since CAC is a cost and revenue isn't profit.
What is a good LTV:CAC ratio?
3:1 is the most commonly cited minimum healthy ratio, popularized by VCs and operators like David Skok. Below 1:1 you lose money on every customer. 1–3:1 is thin. Above 5:1 can actually signal under-investment in growth — you're leaving expansion on the table by being too conservative on acquisition spend.
Why use churn rate instead of a fixed lifespan?
Churn compounds, so 1 ÷ churn rate is the mathematically correct way to get average customer lifespan for a business with roughly constant churn. Guessing a lifespan in months (e.g. 'customers stay 2 years') tends to be optimistic and ignores the customers who leave in month one.
Does this work for ecommerce, not just SaaS?
The formula applies to any repeat-purchase business — swap 'monthly churn' for the inverse of repeat purchase rate, and ARPU for average order value × purchase frequency. For genuinely one-time-purchase businesses, LTV largely collapses to average order value, and this ratio matters less than break-even ROAS.
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New to the terms? See LTV:CAC, LTV, and churn rate in the marketing glossary.