Business & SaaS · free calculator
SaaS LTV:CAC + payback calculator
Compute customer LTV, LTV:CAC ratio, and CAC payback period for a SaaS business — including churn, gross margin, expansion revenue, and discount rate.
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LTV : CAC
Healthy SaaS: 3:1 or better
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- Customer LTV (NPV)$1,676
- CAC payback10.8
- Avg lifetime33
LTV, CAC, and the unit economics of SaaS
The two numbers every SaaS investor will ask about: how much does a customer cost to acquire, and how much profit do they generate over their lifetime? The ratio between them — LTV:CAC — is the unit-economics scoreboard.
The healthy ratios
- LTV:CAC ≥ 3:1 — table stakes for venture-backed SaaS
- LTV:CAC > 5:1 — likely under-investing in growth
- LTV:CAC < 1:1 — burning money on every customer
- CAC payback < 12 months — capital-efficient growth
- CAC payback > 24 months — needs deep funding to scale
What this calculator does differently
Most LTV calculators use the textbook formula LTV = ARPU × Gross Margin / Churn. That's correct for a steady-state, no-expansion, no-discounting business. Real SaaS isn't that.
This calculator runs a month-by-month simulation with three corrections:
- NPV discounting: A dollar 24 months out is worth less than a dollar today. Default 10% annual discount.
- Expansion revenue: Net revenue retention (NRR) above 100% means surviving customers spend more over time. Top SaaS companies hit 120-130% NRR.
- Bounded horizon: Caps lifetime at 240 months (20 years) to prevent infinite tails when churn approaches zero.
Reading your numbers
- High LTV but bad payback: You're acquiring sticky customers but the upfront cost is too high — likely overpaying for ads or sales.
- Low LTV, fast payback: Prosumer or freemium model. Profitable per acquisition but capped on growth ceiling.
- High churn (>5%/mo): Truncates LTV regardless of how much you spend on retention. Fix product-market fit before scaling acquisition.
Where these numbers go wrong
- CAC accounting: Include the full cost — sales salaries, marketing software, paid ads, content production, ops overhead allocated to GTM. Not just paid ads.
- Gross margin definition: SaaS GM should exclude R&D and S&M but include hosting, customer support, data egress, and third-party COGS (Stripe fees, etc).
- Churn measurement: Use revenue churn (dollar-weighted), not logo churn (count-weighted), if you have customer-tier variation.
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