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SaaS Unit Economics Calculator: LTV & CAC
Check whether each customer is worth what it costs to win. Four inputs give you lifetime value, LTV:CAC and how many months it takes to earn back acquisition spend.
- LTV:CAC ratio
- 2.6 : 1
- Customer lifetime value (LTV)
- €3,168
- CAC payback period
- 15.2 months
- Average customer lifetime
- 40.0 months
- Gross profit per account
- €79.20/ month
- Annual churn equivalent
- 26.2%
Positive, but thin: little room for rising acquisition costs.
LTV = ARPA × gross margin ÷ monthly churn. Payback = CAC ÷ (ARPA × gross margin).
A ratio around 3:1 and a payback well under 12–18 months are widely used rules of thumb, not laws. They vary by market, contract length and growth stage.
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How it works
- Enter your average monthly revenue per paying account (MRR ÷ customers).
- Add your gross margin and monthly customer churn rate.
- Enter the customer acquisition cost: sales and marketing spend divided by new customers in the same period.
- Read LTV, LTV:CAC and CAC payback. Try different churn values to see how sensitive the result is.
FAQ
How do you calculate LTV for a SaaS business?
A common simple formula is ARPA × gross margin ÷ monthly churn rate. With €99 ARPA, 80% gross margin and 2.5% monthly churn, LTV is about €3,168.
What is a good LTV:CAC ratio?
Around 3:1 is the most widely quoted rule of thumb. Below 1:1 you lose money on every customer; far above 5:1 can mean you are under-investing in growth.
How do you calculate CAC payback period?
Divide CAC by the monthly gross profit per customer (ARPA × gross margin). €1,200 CAC and €79.20 monthly gross profit give a payback of about 15 months.
Why does churn have such a big effect on LTV?
Average lifetime is 1 ÷ churn, so halving churn doubles lifetime and LTV. Small errors in the churn estimate therefore change the result a lot, especially for young startups with little data.
Should LTV use revenue or gross margin?
Using gross margin is more conservative and closer to the cash a customer really contributes. Revenue-based LTV looks larger but overstates what you can afford to spend on acquisition.
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