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LTV to CAC Ratio Calculator

Compute your LTV to CAC ratio. Derive lifetime value from ARPA, gross margin, and churn, then check it against the healthy 3:1 benchmark.

LTV to CAC Ratio Calculator

Sets the period for ARPA and churn. They must match: use monthly revenue with monthly churn, or annual with annual.

Recurring revenue per customer in one month.

Share of revenue left after cost of serving the customer.

Share of customers lost each month. Drives the average lifetime of 1 divided by churn.

Fully loaded sales and marketing cost to win one customer.

LTV to CAC ratio

4.80 : 1

Healthy (3:1 to 5:1)

This is the widely cited sweet spot. Lifetime value comfortably outruns acquisition cost while you keep investing in growth.

Customer lifetime value (LTV)
$1,920.00
Customer acquisition cost (CAC)
$400.00
Gross-margin revenue
$96.00 / month
Average customer lifetime
20.0 months
CAC payback
4.2 months
LTV = (ARPA times gross margin) divided by churn rate. Ratio = LTV divided by CAC. The month cancels out, so the ratio is the same whether you enter monthly or annual figures, as long as ARPA and churn share the same period.

Frequently Asked Questions about the LTV to CAC Ratio Calculator

What is the LTV to CAC ratio?
The LTV to CAC ratio compares the lifetime value of a customer (LTV) against the cost to acquire that customer (CAC). It is a core SaaS unit-economics check: a ratio of 3:1 means each customer returns three dollars of margin-weighted lifetime value for every dollar spent to win them. Higher is generally better, up to a point.
How is LTV calculated here?
This calculator uses the gross-margin LTV formula: LTV = (ARPA times gross margin) divided by churn rate. ARPA is average revenue per account per period, gross margin is the share of revenue left after serving the customer, and churn is the share of customers lost each period. Dividing by churn captures the average customer lifetime, which equals 1 divided by the churn rate.
What is a good LTV to CAC ratio?
The widely cited target is 3:1. Below 1:1 you lose money on every customer because acquisition costs more than the customer ever returns. Between 1:1 and 3:1 the business survives but sits under the benchmark. A ratio of 3:1 to 5:1 is considered healthy, and above 5:1 can signal that you are underinvesting in growth and could spend more on acquisition.
Do ARPA and churn need to use the same period?
Yes. If you enter monthly ARPA, use a monthly churn rate; if you enter annual ARPA, use annual churn. The period selector keeps the labels consistent. The period cancels out in the formula, so the resulting LTV and ratio are the same either way, as long as both inputs share the same period.
What is CAC payback and how is it different from the ratio?
CAC payback is the number of periods of gross-margin revenue it takes to recoup one customer acquisition cost, computed as CAC divided by (ARPA times gross margin). The ratio measures total lifetime return against CAC, while payback measures how fast you recover the upfront spend. A strong ratio with slow payback can still strain cash flow.
Is this a substitute for financial advice?
No. This calculator gives an estimate based on the gross-margin LTV model and the inputs you provide; it is not financial advice. Real LTV depends on cohort behavior, expansion revenue, discount rates, and changing churn over time, which a single-point formula simplifies. Use it for directional planning, not as a guarantee of returns.

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