B2B ROI Calculator

LTV:CAC Ratio Calculator

LTV and CAC → the ratio, the CAC ceiling your target allows, and how far you are from it. Transparent formula, exportable PDF & CSV report — free, no signup to calculate.

Advanced inputs & assumptions
How is this calculated?
  • LTV : CAC = LTV / CAC
  • max CAC at target = LTV / target ratio
  • LTV needed at today’s CAC = CAC × target ratio
  • CAC headroom = max CAC at target − CAC
  • distance to target % = (LTV:CAC / target ratio − 1) × 100
  • gross profit per customer after CAC = LTV − CAC
  • CAC payback = CAC / (ARPA × gross margin%) (months)
  • return per unit of CAC = (LTV − CAC) / CAC

The ratio is only as good as the LTV you feed it. Use a gross-margin LTV, not a revenue LTV: CAC is real cash, so it should be compared against margin dollars. A revenue LTV will flatter the ratio by roughly one divided by your gross margin.

The 3:1 convention is a planning heuristic, not a law. It came out of SaaS operating practice and assumes a subscription business with a long, fairly stable retention curve; it says nothing about a business whose customers pay once, and it ignores how long the payback takes — which is why CAC payback is shown alongside it.

Nothing here is discounted for time. A ratio of 3:1 earned over eighteen months and one earned over five years look identical in this calculator; read the CAC payback figure next to it before treating them as the same.

Full methodology & default values →

Example with demo defaults — adjust to your numbers

LTV : CAC ratio 3.2:1
Most you can spend per customer at your target $2,133
LTV you would need at today’s CAC $6,000
CAC headroom vs. target $133
Distance to target ratio 6.7%
Gross profit per customer after CAC $4,400
CAC payback 13 mo
Return per unit of CAC 2.20×

Frequently asked questions

How do you calculate the LTV:CAC ratio?

Divide lifetime value by customer acquisition cost: LTV:CAC = LTV ÷ CAC. With the worked example on this page, an LTV of $6,400 and a CAC of $2,000 give 3.2:1. Use the gross-margin LTV rather than a revenue LTV, because CAC is cash you actually spent and belongs next to margin dollars. This page then works the ratio backwards for you: at a 3:1 target, an LTV of $6,400 caps CAC at $2,133, which is $133 of headroom on today’s spend.

Where does the 3:1 target come from?

From David Skok’s SaaS Metrics 2.0 on forentrepreneurs.com, which states that the best SaaS businesses have a ratio “higher than 3, sometimes as high as 7 or 8”. The same article pairs it with a payback guideline — that many of the best SaaS businesses recover CAC in five to seven months. It is an operating guideline that Skok says he validated against many SaaS businesses over two years, not a measured benchmark for every company, and the article itself says many healthy businesses miss it early on. The target field on this page is editable for exactly that reason: put in whatever your own plan commits to.

What does the ratio not tell me?

How long you wait for the money. Nothing in the ratio is discounted for time, so a 3:1 earned over eighteen months and a 3:1 earned over five years are identical to it. It is also silent on how confident you are in the LTV: a lifetime value derived from six months of retention data is a projection, and the ratio inherits every bit of that uncertainty. Read the CAC payback figure next to the ratio, and treat a very high ratio built on a thin retention history as a question rather than an answer.

How is this different from the LTV calculator?

The LTV calculator derives lifetime value in the first place, from ARPA, gross margin and churn, and shows the ratio as one of its outputs. This page starts where that one finishes: it takes LTV and CAC as given and answers the decisions that follow — what CAC ceiling your target implies, what LTV you would need to justify today’s spend, and how far off target you currently are. Work out LTV there, then bring it here.

Where do the default values come from?

The pre-filled numbers are demonstration defaults that produce a realistic example — they are not claimed industry averages. Replace them with your own figures for an accurate result. Where a field is labelled as an assumption, adjust it to match your business; the methodology page lists every default and its status.

Is my data stored anywhere?

Calculating stores nothing: every calculation runs in your browser, there is no account, and nothing you type is sent while you calculate. Only if you download the PDF report do we receive the work email you enter plus a short summary of the inputs you modelled, so we can follow up — the privacy page states exactly what is kept.