What is a good LTV to CAC ratio?

A healthy LTV:CAC ratio for B2B SaaS is 3:1 or higher. A ratio of 5:1 or higher is excellent. Below 2:1 means your acquisition costs are unsustainable. Below 1:1 means you are losing money on every customer.

How do you calculate CAC?

CAC (Customer Acquisition Cost) = Total Sales and Marketing Spend / Number of New Customers Acquired in the same period. For example, if you spend $50,000/month and acquire 10 new customers, your CAC is $5,000.

How do you calculate LTV?

For SaaS: LTV = Average MRR per Customer / Monthly Churn Rate. For example, $2,000 MRR per customer with 2% monthly churn = $100,000 LTV. For services businesses: LTV = Average Annual Revenue per Customer x Average Customer Lifetime in Years.

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CAC & LTV Calculator

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Quick Answer

CAC (Customer Acquisition Cost) is the total sales and marketing spend divided by new customers acquired in a period. LTV (Lifetime Value) is average revenue per customer multiplied by gross margin and average customer lifespan. A healthy B2B SaaS LTV:CAC ratio is 3:1 or higher, meaning you earn at least $3 for every $1 spent acquiring a customer. Use this free calculator to benchmark your unit economics and identify whether your marketing spend is building or burning value.

Your Metrics

Monthly Marketing + Sales Spend ($) New Customers Per Month Avg. MRR or Monthly Revenue Per Customer ($) Monthly Churn Rate (%) Gross Margin (%)

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Enter your metrics to see
your unit economics health score

5:1+

Excellent

Every acquisition dollar returns 5x. Scale aggressively.

3–5:1

Healthy

Good unit economics. Optimize channels and increase spend.

2–3:1

Acceptable

Viable but tight. Reduce CAC or increase retention urgently.

<2:1

Critical

Unsustainable. Fix CAC or churn before scaling spend.

How to Improve Your CAC and LTV

Reduce CAC

Sharpen ICP to eliminate low-conversion segments
Build inbound demand to reduce paid dependency
Improve MQL definition to reduce wasted sales time
Shorten sales cycle with better sales enablement

Increase LTV

Improve onboarding to reduce early churn
Build expansion revenue with upsell motions
Invest in customer success infrastructure
Create switching costs through deeper integrations

Shorten Payback

Shift from monthly to annual billing (improves cash)
Increase ACV through better positioning
Target higher-value ICP segments
Reduce onboarding time to activate value faster

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