LTV to CAC Ratio Calculator
Enter average revenue per account, gross margin, monthly churn and customer acquisition cost to get lifetime value and the ratio investors ask about. Transparent formula, no email.
Nothing is stored and nothing is sent to a server. No email required.
What Is the LTV to CAC Ratio
The LTV to CAC ratio compares the gross profit a customer produces over their lifetime against the cost of acquiring them. A ratio of 3 to 1 is the common target for B2B SaaS.
A ratio below 1 means you lose money on every customer. A ratio far above 5 usually means you are underspending on growth rather than running a brilliant business.
How This Calculator Works
Lifetime from churn assumes a constant churn rate, which overstates lifetime when churn is front-loaded. For a conservative view, cap lifetime at 36 or 60 months.
How to Read the Ratio
| Ratio | Reading |
|---|---|
| Under 1 to 1 | Every customer loses money. Stop scaling spend |
| 1 to 3 | Growth is inefficient. Fix pricing, retention or conversion |
| 3 to 5 | Healthy. The commonly cited target range |
| Over 5 | Efficient, and usually a sign you could invest more in growth |
How to Improve the Ratio
Frequently Asked Questions
1. What is a good LTV to CAC ratio?
Around 3 to 1 is the common target. Anything above 5 to 1 often means you should be spending more on growth.
2. Should LTV use revenue or gross profit?
Gross profit. A revenue-based lifetime value overstates the number by whatever your cost of service is.
3. Which churn rate should I enter?
Monthly logo churn. If you only track annual churn, divide it by twelve for a rough monthly figure.
4. Why cap the lifetime?
Because a 1 percent churn rate implies a 100-month lifetime, and few B2B contracts justify projecting eight years of revenue.
5. How is this different from CAC payback?
Payback measures how fast you recover the cost. This ratio measures how much you make in total.