CAC & LTV:CAC Ratio Calculator
Two numbers decide whether growth is healthy: what a customer costs to acquire (CAC) and what they’re worth (LTV). See your ratio against the 3:1 benchmark.
Analytics tools to track CAC and LTV
Learn moreThe 3:1 rule
A widely used benchmark says a sustainable business earns at least 3× a customer’s acquisition cost over their lifetime, and recovers CAC in under a year. Below 3:1 you’re spending too much to grow; far above it you may be under-investing in growth.
How it’s calculated & sources
CAC = sales & marketing spend ÷ new customers. LTV = monthly revenue × gross margin × lifespan. Ratio = LTV ÷ CAC. Payback = CAC ÷ (monthly revenue × margin).
Benchmark: the SaaS rule of thumb of LTV:CAC ≥ 3:1 with CAC payback under ~12 months (a16z / SaaS metrics).
Results update as you type and are general estimates, not personalized financial, tax, medical or legal advice. Verify with a professional.
Worked example
Spending $50,000 to land 100 customers is a $500 CAC. At $120/month, 75% margin, 24-month life, LTV is $2,160 — a healthy 4.3:1 with about a 6-month payback.
Frequently asked questions
How do I estimate lifespan?
Use 1 ÷ monthly churn rate. If 4% of customers leave each month, average life is ~25 months.
Should I include gross margin?
Yes — LTV should be on margin, not revenue, so it reflects the cash a customer actually generates.