What is a good LTV:CAC ratio?

Around 3:1 is the common benchmark for healthy SaaS unit economics. Much below 3× and acquisition is hard to justify; far above 5× often means you are under-investing in growth and could afford to spend more.

What is a good CAC payback period?

Under 12 months is the typical target, and best-in-class SaaS recovers acquisition cost in under 6. Longer payback ties up cash and slows how fast the business can compound.

How do you calculate CAC?

Divide total sales and marketing spend over a period by the number of new customers acquired in that same period.

How is LTV calculated?

Multiply average revenue per customer per month by gross margin and by expected customer lifespan in months: LTV = ARPU × gross margin × lifespan.

Omega Point Systems

Calculator / 02

Unit economics, solved out loud.

Compute customer acquisition cost, lifetime value, payback, and the ratio that decides whether scaling makes the problem better — or worse.

Start from a preset

Inputs

Marketing spend

$/ month

New customers acquired

/ month

Avg revenue per customer

$/ month

Gross margin

Avg customer lifespan

months

∎Healthy. The unit economics are compounding.

Outputs

CAC

$833

customer acquisition cost

LTV

$6,989

gross profit per customer · life

LTV : CAC

8.4×

threshold 3× +

Payback

3.3 months

threshold < 12 mo

CAC vs LTVCAC LTV

Formula · LTV

LTV = ARPU · L · g

where L = lifespan (mo), g = gross margin

Formula · CAC

CAC = S ÷ N

where S = marketing spend, N = customers

Take it with you

Open this calculator as an editable Google Sheet — your inputs and live formulas, ready to fork.

Unit economics tell you whether acquiring a customer makes money or loses it. This free calculator computes CAC, LTV, the LTV:CAC ratio, and payback period from five inputs.

How to calculate unit economics

CAC is marketing and sales spend divided by new customers acquired. LTV is average revenue per customer per month, multiplied by gross margin and by expected lifespan in months. The LTV:CAC ratio is LTV ÷ CAC. Payback period is CAC ÷ (monthly revenue × gross margin) — the number of months it takes to recoup acquisition cost out of gross profit.

How to read the result

An LTV:CAC ratio at or above 3× with a payback under 12 months is the rough bar for healthy, fundable unit economics. A high ratio with slow payback is a cash-flow drag — you are right long-term but starved short-term. Fast payback with a weak ratio usually means retention is the hole, not acquisition.

Worked example

Spend $200,000 to acquire 240 customers and CAC is about $833. At $320/month in revenue, 78% gross margin, and a 28-month lifespan, LTV is about $6,989 — an 8.4× ratio and a payback near 3.3 months. Comfortably above threshold: the economics compound, and spending more makes the business better, not worse.

Frequently asked questions

What is a good LTV:CAC ratio?: Around 3:1 is the common benchmark for healthy SaaS unit economics. Much below 3× and acquisition is hard to justify; far above 5× often means you are under-investing in growth and could afford to spend more.
What is a good CAC payback period?: Under 12 months is the typical target, and best-in-class SaaS recovers acquisition cost in under 6. Longer payback ties up cash and slows how fast the business can compound.
How do you calculate CAC?: Divide total sales and marketing spend over a period by the number of new customers acquired in that same period.
How is LTV calculated?: Multiply average revenue per customer per month by gross margin and by expected customer lifespan in months: LTV = ARPU × gross margin × lifespan.