LTV:CAC Calculator
Calculate your customer lifetime value, CAC payback period, and LTV:CAC ratio. The metrics every Series A investor asks about - and what they actually mean for your business.
Customer Acquisition Cost
Customer Lifetime Value
Annual equivalent: 21.5%
Upsell and expansion above base ARPU
Unit economics
LTV:CAC Ratio
3.5x
Strong - Series A ready
Customer LTV
$7.0K
gross profit over lifetime
CAC
$2.0K
cost to acquire one customer
CAC payback period
13 months
Acceptable
Avg customer lifetime
50 months
4.2 years
LTV:CAC benchmark
Monthly gross profit per customer
$140
Find investors who understand SaaS unit economics.
Search over 89,000+ angels and VCs by investment stage, investment interest, and location. Unlock verified contacts on subscription.
Start Free TrialWhat LTV:CAC tells investors about your business
LTV:CAC is the single most important unit economics metric for a SaaS business. It answers the fundamental question: for every dollar you spend acquiring a customer, how many dollars of gross profit do you generate over that customer's lifetime? A ratio above 3x is the standard benchmark for a venture-scale SaaS business. Below 1x means you are losing money on every customer you acquire - no amount of growth will fix that.
The payback period is the companion metric: how many months does it take to recover your CAC from gross profit? Best-in-class SaaS companies achieve payback periods under 12 months. Series A investors typically want to see payback under 18 months with a credible path to improvement. Payback periods above 24 months indicate either high CAC, low margins, or high churn - and need a clear explanation.
Churn is the multiplier
LTV is calculated as gross profit per month divided by monthly churn rate. A company with 1% monthly churn has an average customer lifetime of 100 months. A company with 5% monthly churn has a lifetime of 20 months. Reducing churn from 5% to 2% nearly triples LTV - it is the single most leveraged improvement most early-stage SaaS companies can make to their unit economics.
Gross margin matters more than revenue
LTV is based on gross profit, not revenue. A $500/month customer with 40% gross margins contributes $200/month to LTV. The same customer with 80% margins contributes $400/month - doubling LTV without changing pricing. This is why investors scrutinise gross margin closely. A SaaS company with sub-50% gross margins has structural problems that compress every other metric.
CAC payback vs LTV:CAC
LTV:CAC is a long-run measure - it assumes you capture the full customer lifetime. Payback period is the short-run measure - it shows cash efficiency. A business can have an excellent LTV:CAC ratio but a terrible payback period if customers churn after 36 months but CAC is high. Report both. Investors at growth stage increasingly focus on payback because it directly drives capital efficiency and burn multiple.
Frequently asked questions
- What is a good LTV:CAC ratio for SaaS?
- The benchmark is 3:1 - for every dollar spent acquiring a customer, you should generate three dollars of gross profit over their lifetime. Above 5:1 is considered excellent and signals strong product-market fit with efficient go-to-market. Below 1:1 means you are destroying value with each new customer. At seed stage, investors often accept lower ratios with a credible improvement path; by Series A, 3:1 is the floor for a venture-fundable business.
- How do you calculate Customer Lifetime Value?
- LTV = (Average Revenue Per User x Gross Margin %) / Monthly Churn Rate. For example: $300 ARPU, 70% gross margin, 2% monthly churn = ($300 x 0.70) / 0.02 = $10,500 LTV. This assumes a constant churn rate and no expansion revenue. If your customers expand over time (NRR above 100%), adjust the effective churn rate downward to reflect the net revenue retention impact on LTV.
- What is a good CAC payback period?
- Under 12 months is considered best-in-class. 12-18 months is strong for most B2B SaaS. 18-24 months is acceptable at seed and early Series A with a clear improvement plan. Above 24 months is a red flag that requires explanation. Consumer SaaS typically targets shorter payback periods (6-12 months) because consumer churn is higher and the margin for error is smaller.
- How do you reduce CAC?
- The most effective levers are: improving conversion rates at each stage of the sales funnel (so you spend less to convert the same number of leads), building product-led growth or organic channels that reduce paid acquisition dependency, increasing deal size so each customer acquisition covers more of the fixed cost, and reducing sales cycle length so your sales team closes more deals per month. Tracking CAC by acquisition channel separately - not just in aggregate - usually reveals one or two channels with dramatically better efficiency than others.
- Should I include salaries in my CAC calculation?
- Yes. A complete CAC calculation includes all sales and marketing costs: paid acquisition, salaries of sales and marketing staff, tools and software, events and conferences, and agency fees. Some founders calculate a blended CAC (all channels combined) and a paid CAC (paid acquisition only). Report both if asked - investors want the blended number to understand true economics, but the paid CAC to understand channel efficiency and scalability.
Next step: shortlist investors
Segment the dataset by investment stage, investment interest, and location, then access verified contacts and exports on subscription.