LTV:CAC Ratio Calculator
Compare customer lifetime value with acquisition cost to see whether your growth is efficient, break-even or burning cash.
Unit economics
Ratio
LTV to CAC
Enter LTV and CAC to see the ratio.
The 3:1 rule, and when to ignore it
Investors commonly look for an LTV to CAC ratio of about 3:1 in SaaS. Below 3:1, the business is spending a lot to win each customer relative to what that customer is worth. Above 5:1, it may be under-investing in growth and leaving market share on the table. Treat the ratio as a direction to steer by, not a hard floor.
How to read the result
- 5:1 or higher: very efficient. Consider spending more to grow faster.
- 3:1 to 5:1: healthy for most subscription businesses.
- 2:1 to 3:1: workable, with room to improve retention, pricing or acquisition costs.
- 1:1 to 2:1: roughly break-even once overhead is included.
- Below 1:1: each new customer loses money.
The ratio is only as good as its inputs. Use gross-profit LTV and a fully loaded CAC that includes salaries, tools and agency fees, not just ad spend.
Frequently asked questions
Should LTV include gross margin?
Yes. Use gross-profit LTV, meaning revenue LTV multiplied by your gross margin, for the cleanest comparison with a fully loaded CAC.
What is a good CAC payback period?
Many SaaS teams aim to earn back CAC within 12 months, and within 18 months for larger enterprise deals. The ratio and payback period answer different questions, so track both.