Canonical formula calculator
SAAS BUSINESSES — LTV TO CAC RATIO
Whether the customers you acquire are worth what you pay to get them. For saas businesses, the picture has its own shape — see the industry context below.
What the average customer is worth to you over their entire relationship.
What it costs to acquire one new customer (marketing + sales spend divided by new customers).
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Optional — helps us match this calculation against relevant case studies (coming soon).
What this tells you
SaaS LTV-to-CAC of 3:1 is the conventional "healthy" benchmark, but it conceals what matters: HOW you got there. A 3:1 ratio built from expansion revenue (NRR > 110%) is durable; the same ratio built from initial contract length is fragile. Watch the NRR alongside the ratio — see the Monthly Recurring Revenue and Retention Rate calculators. The ratio of customer lifetime value to customer acquisition cost is one of the cleanest signals in business: a single number that tells you whether the customers you acquire are worth what you pay to acquire them. Above 3:1 is generally considered healthy. Below 1:1 means you are losing money on every customer you acquire.
When to use it
Industry benchmark — Conventional healthy LTV:CAC (SaaS): 3:1. Check this any time you have refreshed estimates of LTV or CAC. Use it especially when deciding whether to scale acquisition spend — a high ratio means there is room to spend more on acquisition; a low ratio means you should fix economics before pouring more money in.
What it doesn’t tell you
A ratio is a snapshot. It does not tell you about payback period (how long until acquisition cost is recovered), about cohort changes over time, or about whether your unit economics are improving or deteriorating. A 3:1 ratio that is trending down is a different reality than a 2:1 ratio that is trending up.
Coming soon
Cases, plays, and benchmarks for this metric will appear here as the Moonshot knowledge libraries grow. For now: log in to track your number over time and Moonshot will surface trend warnings when the substrate fills in.