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.
Worked example
How the number is worked out
The same gutter company, now asking whether that $150 was worth spending.
Starting from
Working
Each customer returns about three and a half times what it cost to win them. The figure says nothing about WHEN that money arrives — a healthy ratio paid back over three years still empties an account this month.
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.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.