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LTV:CAC. Unit economics in one ratio.
The fundraising-deck metric. ARPU, margin, churn and CAC give you LTV, ratio and payback.
Inputs
Results
LTV
$4,680
gross profit lifetime
LTV : CAC
4.9 : 1
target ≥ 3
Payback
6.8 mo
months to recover CAC
Avg lifetime
33.3 mo
1 / churn
Benchmark
Healthy economics
LTV:CAC 4.9:1 with 6.8-month payback. Invest in growth.
How it works.
Retention is the highest-leverage lever. Cutting churn from 5% → 3% raises LTV by 67% — far more impact than equivalent CAC reduction.
FAQ.
What is the LTV:CAC ratio?+
Customer Lifetime Value ÷ Customer Acquisition Cost. The single most-watched SaaS unit-economics metric. Above 3:1 = healthy. Below 1:1 = losing money on every customer.
How is LTV calculated?+
LTV = (ARPU × gross margin) ÷ monthly churn. Some teams use ARPU × avg lifetime months × margin. Both work; document which you use.
What's a good LTV:CAC ratio for SaaS?+
3:1 is the standard 'healthy' benchmark. 5:1+ means you're underspending on growth — invest more. Below 1.5:1 means burn either the CAC or the unit cost down.
Should I include support and onboarding cost in CAC?+
Yes — fully loaded CAC includes everything required to land a customer. Excluding implementation costs flatters CAC and overstates unit economics.
How does churn affect LTV?+
Massively. Cutting monthly churn from 5% to 3% raises LTV by 67%. Retention work is the highest-leverage unit-economics improvement.