LTV:CAC Ratio: $20,000 LTV, $3,000 CAC
A $20,000 LTV against a $3,000 CAC yields a 6.7:1 ratio, signaling highly efficient and scalable unit economics.
How to use this tool
- Enter your customer lifetime value (use gross-margin LTV for the most honest figure).
- Enter your fully-loaded customer acquisition cost.
- Optionally enter the monthly gross margin per customer to estimate CAC payback.
- Read the ratio, net value per customer, payback period, and verdict.
An LTV:CAC ratio of nearly 7:1 suggests strong product stickiness and efficient sales and marketing — an excellent profile for raising growth capital.
Frequently asked questions
- What is a good LTV:CAC ratio?
- A ratio around 3x is the common SaaS benchmark — about $3 of lifetime value per $1 of acquisition cost. Below 1x you lose money on each customer; much above 5x can mean you are under-investing in growth and leaving expansion on the table.
- Should LTV be revenue or gross margin?
- Gross-margin LTV is more conservative and more defensible because it reflects money you actually keep after the cost of serving the customer. If you use revenue LTV, your ratio will look better than the economics really are.
- How is this different from CAC payback?
- LTV:CAC measures lifetime efficiency; CAC payback measures speed — how many months it takes to earn back the acquisition cost. A strong business usually wants a high ratio and a short payback (often cited as under 12 months).