Free Tool
Calculate your LTV, CAC ratio, payback period, and customer lifetime in seconds. Understand if your business model is sustainable before you scale.
LTV : CAC Ratio
Customer Lifetime
20.0 mo
At 5% monthly churn
Lifetime Value (LTV)
$800
ARPU x Lifetime x Margin
Payback Period
3.8 mo
Healthy (under 12 months)
Break-even Customers
4
To recoup one CAC
Monthly Recurring Revenue (MRR) Projections
$5,000
100 customers
$25,000
500 customers
$50,000
1,000 customers
Industry Benchmarks
Good LTV:CAC Ratio
Benchmark: > 3x
5.3x
On track
Healthy Payback Period
Benchmark: < 12 months
3.8 mo
On track
Avg SaaS Churn
Benchmark: 3 — 8% / mo
5%
On track
Avg B2C Churn
Benchmark: 5 — 15% / mo
5%
On track
Unit economics measure the revenue and costs associated with a single unit of your business — typically one customer. Getting these numbers right is the difference between a business that scales and one that burns cash faster as it grows.
LTV measures the total revenue a business can expect from a single customer over their entire relationship. It is calculated as ARPU multiplied by customer lifetime multiplied by gross margin. A higher LTV means each customer is more valuable, giving you more room to spend on acquisition.
CAC is the total cost of acquiring a new customer, including marketing spend, sales costs, and any associated overhead. Lower CAC means more efficient growth. The key is not just reducing CAC but ensuring the LTV:CAC ratio stays healthy.
This ratio tells you how much value you get for every dollar spent on acquisition. A ratio below 1x means you are losing money on every customer. Between 1x and 3x means the business works but is not yet efficient. Above 3x is considered healthy for venture-backed SaaS companies. Above 5x may indicate you are under-investing in growth.
Monthly churn rate is the percentage of customers who cancel each month. A 5% monthly churn means you lose half your customers in about 14 months. Even small improvements in churn have massive impacts on LTV. Reducing churn from 8% to 4% doubles customer lifetime.
Payback period is how many months it takes to recoup the cost of acquiring a customer. Shorter payback means faster reinvestment into growth. Most investors want to see payback periods under 12 months for SaaS businesses. Enterprise SaaS can tolerate up to 18 months.
Gross margin is the percentage of revenue remaining after direct costs of delivering your product. SaaS companies typically have 70-85% gross margins. Services businesses run 40-60%. Higher margins mean more of each revenue dollar can cover acquisition costs and generate profit.
Customer Lifetime
1 / Churn Rate
1 / 0.05 = 20 months
Lifetime Value (LTV)
ARPU x Lifetime x Margin
$50 x 20 x 0.80 = $800
LTV:CAC Ratio
LTV / CAC
$800 / $150 = 5.3x
Payback Period
CAC / (ARPU x Margin)
$150 / ($50 x 0.80) = 3.8 mo
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