LTV:CAC Ratio

Are your customers worth more than they cost to acquire? The unit-economics check every operator should run.

Healthy — 6.7x LTV:CAC

ARPU ($/month)$50

Monthly Churn Rate (%)5%

Customer Acquisition Cost ($)$150

Results

LTV

$1,000

LTV:CAC

6.7x

Payback

3.0mo

LTV vs CAC

Lifetime Value$1,000

Acquisition Cost$150

Each customer generates 3x+ what it costs to acquire.

LTV:CAC Benchmarks

Elite5:1+

Healthy3:1–5:1

Improving2:1–3:1

Unsustainable1:1–2:1

Losing Money< 1:1

Bessemer, SaaStr

Formulas

LTV = ARPU ÷ Monthly Churn Rate

LTV:CAC = LTV ÷ CAC

Payback = CAC ÷ ARPU

3:1 means each customer generates $3 for every $1 spent acquiring them.

What your numbers mean

A 5:1+ ratio means you're under-investing in growth. Consider raising acquisition spend or expanding channels — you have margin to deploy.

Increase acquisition budget on your best channel

Test a higher-CAC channel you've avoided

Reinvest margin into retention to push LTV higher

Project inquiry

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LTV:CAC summary

LTV$1,000

LTV:CAC ratio6.7x

CAC payback3.0 months

VerdictHealthy