SaaS LTV:CAC Ratio and Unit Economics Simulator
Assess B2B subscription software unit economics. This simulator calculates Customer Lifetime Value (LTV), Customer Acquisition Cost (CAC), the critical LTV:CAC ratio, and CAC payback period in months to evaluate venture capital investability and growth efficiency.
Monthly subscription billing per active customer
Gross margin after cloud hosting and customer support costs
Percentage of customer base cancelling monthly
All-inclusive marketing and sales expense per acquired customer
Ratio of customer lifetime gross profit to acquisition cost (benchmark: ≥ 3.0x)
How to Use This Calculator
- Enter average monthly subscription revenue (ARPU) per customer account.
- Enter subscription gross margin percentage (typically 75% to 85% for SaaS).
- Enter monthly customer logo churn rate percentage.
- Enter fully loaded CAC cost.
- Review LTV:CAC ratio and CAC payback period: target LTV:CAC ≥ 3.0x and payback < 12 months.
Formula & Calculation Methodology
Calculates gross profit customer lifetime value based on subscription churn, and divides by CAC to determine unit economic efficiency.
Worked Example
$150 ARPU, 80% gross margin, 2.5% monthly churn, and $1,200 CAC
Frequently Asked Questions
Why is an LTV:CAC ratio of 3.0x considered the golden standard for SaaS?↓
An LTV:CAC of 3.0x ensures that customer gross profits pay back acquisition costs, cover R&D and general administrative overhead, and deliver healthy 20%+ net operating profit margins.
What does an LTV:CAC ratio above 5.0x indicate?↓
While seemingly positive, an LTV:CAC ratio above 5.0x indicates underinvestment in marketing and sales. The company is growing slower than its potential and leaving market share to faster-spending competitors.
What is considered a healthy CAC payback period in venture capital?↓
Top-tier SaaS startups maintain a CAC payback period between 8 and 14 months. Payback periods over 18 months require massive dilutive cash reserves to sustain growth.
How does Net Revenue Retention (NRR) enhance SaaS LTV?↓
When existing accounts expand (seat upgrades, usage expansion) faster than churn, NRR exceeds 100%, creating negative churn where customer LTV expands indefinitely.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.