About the LTV CAC Ratio Calculator
What is the LTV CAC Ratio Calculator?
The LTV to CAC ratio compares the gross profit a customer generates over their lifetime with the cost of acquiring them. It is the headline test of whether a business's growth is profitable.
Enter monthly revenue per customer, gross margin, average lifetime in months and CAC. A ratio of about 3 or more is the usual target.
How to use the LTV CAC Ratio Calculator
- Average Revenue per Customer per Month (₹) (sample: 2,000)
- Gross Margin (%) (sample: 75)
- Average Customer Lifetime (months) (sample: 30)
- Customer Acquisition Cost (₹) (sample: 12,000)
- Press Calculate LTV:CAC (results also refresh as you type). The result card shows the LTV : CAC Ratio, along with Customer lifetime value (gross-margin basis), CAC payback and Reading.
Formula used
LTV : CAC = (ARPU × Gross margin × Lifetime months) ÷ CAC
- CAC payback = CAC ÷ (ARPU × gross margin)
Below 1, every new customer loses money; above 5, you may be under-investing in growth.
Worked example
These are the sample values already filled in the calculator above, and the result it returns for them:
| Input | Sample value |
|---|---|
| Average Revenue per Customer per Month (₹) | 2,000 |
| Gross Margin (%) | 75 |
| Average Customer Lifetime (months) | 30 |
| Customer Acquisition Cost (₹) | 12,000 |
| Result | Value |
|---|---|
| LTV : CAC Ratio | 3.75× |
| Customer lifetime value (gross-margin basis) | ₹45,000 |
| CAC payback | 8 months |
| Reading | Healthy (3–5×) |
SaaS benchmarks
| Metric | Healthy benchmark |
|---|---|
| LTV : CAC | 3× or more |
| CAC payback | Under 12 months (SMB), under 18–24 months (enterprise) |
| Gross margin | 70–80% or more for software |
| Monthly logo churn | Under 2% (SMB), under 1% (enterprise) |
| Net revenue retention | 100% or more; 120%+ is best-in-class |
| Rule of 40 | Growth % + profit margin % ≥ 40 |
Tips for using the LTV CAC Ratio Calculator
- Raise the ratio by improving retention, raising prices or lowering acquisition cost.
- Calculate the ratio by channel; some channels may be far below 3.