SaaS LTV & CAC Calculator

Lifetime value (LTV) and customer acquisition cost (CAC) answer one question together: does each new customer return more than they cost to win? The calculator above works out CAC, LTV, the LTV:CAC ratio and CAC payback from a few inputs, then ranks your acquisition channels by return.

1. Enter revenue per customer. Use average monthly recurring revenue per account (ARPA), not total company MRR.
2. Set retention. Choose monthly churn, or switch to a fixed lifetime if you don't yet have reliable churn data.
3. Add gross margin and expansion. Gross margin is revenue minus the cost of serving customers. Expansion is the yearly growth in revenue from existing accounts.
4. List each acquisition channel. Enter monthly spend and customers won for each one, plus sales team cost and marketing overhead.
5. Read the results. Check LTV:CAC and payback first, then the channel ranking to see where to put the next dollar.

Take a B2B SaaS company selling at $500 a month per account, with 80% gross margin and 2% monthly churn. It spends $60,000 a month on sales and marketing, salaries included, and wins 12 customers a month. These figures are illustrative, not a benchmark.

• Lifetime: 1 ÷ 0.02 = 50 months (about 21.5% annual churn).
• LTV: $500 × 0.8 × 50 = $20,000.
• CAC: $60,000 ÷ 12 = $5,000.
• LTV:CAC: $20,000 ÷ $5,000 = 4.0:1.
• Payback: $5,000 ÷ $400 = 12.5 months.

A ratio of 4.0:1 clears the common 3:1 rule of thumb, but a 12.5-month payback means each customer takes about a year to repay their acquisition cost. That is cash the company has to fund up front, so growth speed depends on how much runway it has, not just on the ratio.

The most widely used SaaS rules of thumb are an LTV:CAC ratio of at least 3:1 and CAC payback under 12 months. They are starting points for a conversation, not laws. What counts as healthy depends on your stage, deal size and how predictable retention is.

• Below 1:1: every customer loses money over their lifetime. Fix pricing, retention or acquisition cost before spending more on growth.
• 1:1 to 3:1: the model works on paper but leaves little margin for error. Look for the channel or segment dragging the average down.
• 3:1 to 5:1: generally healthy. The question becomes how fast you can grow without running out of cash during payback.
• Above 5:1: often a sign of under-investment. You may be leaving growth on the table by spending too little on acquisition.

Payback matters most when cash is tight. Enterprise SaaS with long contracts and strong retention can live with 18 to 24 months. A self-serve product with monthly plans usually needs a much shorter payback, because customers can leave before they have paid back their cost.

Blended CAC tells you whether the business works. Channel CAC tells you where to spend the next dollar. To calculate it, assign each new customer to the channel that sourced them, then divide that channel's spend by the customers it produced in the same period.

1. Pick an attribution rule and keep it. First touch, last touch or the source that created the opportunity all work, as long as you apply the same rule every month.
2. Assign direct costs to each channel. Ad spend, sponsorships, outbound data and sequencing tools, and agency fees belong to the channel that used them.
3. Split shared costs fairly. Salaries and overhead that serve every channel go into blended CAC. The calculator adds sales team cost and marketing overhead on top of channel spend for that reason.
4. Compare channels on return, not just cost. A channel with a higher CAC can still be the best one if its customers stay longer or buy bigger plans.

For outbound in particular, count the full cost of the motion: data and enrichment subscriptions, sending infrastructure, sequencing software and the time reps spend on research. Those costs are easy to miss, and they are exactly what a well-built GTM system reduces.

Cutting spend lowers CAC only if customer volume holds up. The more durable levers change how much pipeline each dollar and each person produces:

• Tighten your ideal customer profile. Fewer, better-fit accounts convert at higher rates and churn less, which improves both sides of the ratio.
• Automate research and list building. Enrichment and scoring systems let reps spend their time on conversations instead of spreadsheets.
• Act on buying signals. Reaching accounts when they hire, raise money or visit your pricing page usually beats cold outreach to a static list.
• Fix the funnel leaks first. A slow lead-response time or a weak demo-to-close rate raises CAC no matter how much pipeline you add.

These are the systems GTM engineers build. Our GTM engineering guide explains the stack layer by layer, and the GTM readiness assessment shows where your go-to-market has gaps.