LTV:CAC Ratio: $6,000 LTV, $2,000 CAC, $125 Monthly Margin
With a $6,000 LTV and $2,000 CAC the LTV:CAC ratio is 3:1 — right at the benchmark threshold for SaaS viability.
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.
This scenario models a mid-market SaaS product where the business sits right at the 3:1 LTV:CAC benchmark, meaning any increase in CAC or churn would put unit economics at risk.
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).