SaaS LTV:CAC ratio. Verdict bands, not just numbers.
Enter ARPU, gross margin, churn rate, CAC. We compute LTV, LTV:CAC ratio, and CAC payback period with verdict bands at the industry-standard cuts (1, 3, 5) so you know whether you're under-investing, healthy, or unsustainable.
Enter ARPU (monthly recurring revenue per account), gross margin %, monthly logo churn %, and customer acquisition cost. We compute LTV, LTV:CAC ratio, and CAC payback period with verdict bands at the industry-standard cuts. Pure browser math.
Revenue minus COGS (hosting, support, payment fees). SaaS typical: 70-85%.
Logo churn. SaaS typical: 1-2% (enterprise), 3-7% (SMB), 10-15% (consumer).
Total sales + marketing spend ÷ new customers acquired in the period.
Privacy: calculation happens in your browser. Nothing is sent or logged.
Four metrics. Get them right or the ratio lies.
ARPU (Average Revenue Per User). Monthly recurring revenue divided by paying customers. For annual-billing SaaS, divide annual contract value by 12 to get monthly equivalent. The blended figure across plan tiers is fine; if you want plan-specific LTV:CAC, run the calculator separately per plan. Don't confuse with ARR, which is annualized — ARPU here is monthly.
Gross margin. Revenue minus cost of goods sold (COGS), expressed as a percentage. For SaaS, COGS is hosting (AWS/GCP), customer support cost, payment processing fees, third-party API costs, and customer-success allocation. Industry typical: 70-85% for product-led SaaS, 60-75% for support-heavy SaaS. Below 60% is unusual for software and worth investigating. Gross margin matters because LTV multiplies it — at 80% margin LTV is 2.7× higher than at 30% margin.
Monthly logo churn rate. Customers lost in the period ÷ customers at start. Use logo churn (per-customer count) rather than dollar churn for the LTV formula. Industry typical: 1-2% monthly for enterprise, 3-7% for SMB, 10-15% for consumer or freemium. Anything above 15% monthly is problematic — at 15% monthly churn the average customer lasts only 6.7 months. Pre-revenue or early-stage SaaS often has noisy churn — use the trailing 3-6 month average.
CAC (Customer Acquisition Cost). Total sales + marketing spend in a period divided by new customers acquired in that period. Include sales team salary + commissions, marketing spend (paid + content + events), and tools (CRM, marketing automation, analytics). Don't include customer success or support — those serve existing customers. Don't include partnerships unless they directly drive new logos. The denominator is new logos only, not paying customers (which is a stock; CAC is a flow).
Four jobs this tool covers.
Job 1: Quarterly board metric. Compute LTV:CAC each quarter from the trailing-12-month average inputs, drop the figure into the board deck. The verdict band saves the conversation — "we're at 3.2:1, healthy zone" tells the board everything in one number. Pair with our Runway Calculator for the cash-side companion metric.
Job 2: Pre-fundraise diligence prep. Investors will compute LTV:CAC from your numbers. If the figure they get is in the <3:1 band, you'll get pushback. Run the calculator with your inputs first, see what investors will see, prepare the answers (improving CAC channel mix, retention initiatives reducing churn, pricing changes lifting ARPU). Better to land the conversation than be caught off guard.
Job 3: Channel-spend allocation. Compute LTV:CAC per acquisition channel separately. The channel with the best ratio is where to invest the next dollar. The channel with the worst ratio is where to cut. Common pattern: organic / referral channels have ratios of 5:1+, paid channels closer to 2:1 or 3:1. The mix decision flows from the per-channel numbers, not the blended one.
Job 4: Pricing-change sanity check. Considering a 30% price increase? Plug the new ARPU into the calculator (assuming churn doesn't move). The new LTV:CAC tells you whether the price change moves you into a healthier band. If the increase pushes you from 2.5:1 to 3.5:1 the case for the price change is strong even with some expected churn impact. Pair with our Payback Period Calculator for the time-axis view.
Six questions users ask.
How is LTV calculated here?
LTV = (ARPU × Gross Margin %) / Monthly Churn Rate. This is the contribution-margin LTV — it counts the gross profit per customer per month, not the revenue. Using gross margin instead of revenue is critical because LTV:CAC is meant to compare profit-per-customer to spend-per-customer, not revenue-per-customer to spend-per-customer. A SaaS with 80% gross margin has a very different LTV than one with 30% gross margin even at identical ARPU. Most published 'LTV calculators' skip the margin step and produce inflated numbers; ours doesn't.
What's a healthy LTV:CAC ratio?
Industry consensus, repeated across SaaS analyst frameworks: 3:1 is the canonical 'healthy' ratio. Below 3:1 you're not creating enough margin per customer to justify the acquisition spend. 1:1 to 3:1 is sustainable but not investable — you're paying back CAC but generating little for reinvestment in growth. Above 5:1 you might be under-investing in growth — you have margin headroom to scale acquisition spend and grow faster. The 3-to-5 band is the balanced zone where most well-run SaaS businesses operate.
How is CAC payback period computed?
CAC / (ARPU × Gross Margin) = months to recoup the acquisition cost from gross profit. A SaaS with $100 ARPU, 80% gross margin, and $1,200 CAC has a payback of $1,200 / ($100 × 0.80) = 15 months. Industry benchmark: <12 months is excellent, 12-18 months is healthy for VC-backed growth, 18-24 months is acceptable for enterprise / longer-cycle SaaS, >24 months is alarming except for very-high-LTV enterprise contracts. Pair with our Runway Calculator to see whether the payback period fits your cash runway.
Should I use monthly or annual numbers?
Monthly. ARPU as monthly recurring revenue per account, churn as monthly logo churn rate, and the LTV formula computes as months × profit-per-month. For annual-billing SaaS, divide ARR by 12 to get monthly ARPU. For mixed monthly + annual contracts, use the blended monthly figure (total MRR ÷ paying customers). The math is identical at any time horizon, but conventions differ — being consistent within your input is what matters.
What about expansion revenue and net dollar retention?
This calculator uses gross logo churn — the simple per-customer model. For SaaS with meaningful expansion revenue (existing customers grow account size over time), the more accurate measure is net dollar retention (NDR) and the LTV formula gets more complex. If your NDR is >100%, your effective LTV is higher than this calculator shows because customers grow rather than shrink over time. For NDR-aware models, use a cohort-revenue spreadsheet rather than this single-rate LTV. For products without meaningful expansion (most SMB SaaS), the simple model here is correct.
Is the data I enter sent anywhere?
No. Calculation happens entirely in your browser. The page is static HTML; the only network request is the initial page load. Safe for sensitive financial data, internal SaaS metrics, or any number you wouldn't want shared with a third party.