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SaaS LTV to CAC Ratio Calculator

Calculate the ultimate health metric for subscription models to prove scalable unit economics.

Stop guessing if your software company is actually scalable.

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The Ultimate SaaS Health Metric

You calculate the lifetime value of a software instance or retainer client and divide it by the total sales and marketing cost required to acquire them.

LTV = (ARPA * Gross Margin) / Churn Rate

Ratio = LTV / CAC

(Where ARPA is Average Revenue Per Account).

How it’s used

You input your average monthly ticket, your fulfillment margins, your monthly cancellation rate, and how much you spend to acquire exactly one new customer. The calculator flags whether your unit economics are broken, healthy, or severely under-scaled.

Why it matters

The 3:1 ratio dictates survival. If your ratio is 1:1, you are paying too much for clients who churn too fast; scaling ads will literally bankrupt you. If your ratio is 6:1, you are practically printing money but actually under-spending on marketing, essentially starving your own massive growth potential.

Frequently Asked Questions

A 3:1 ratio is the industry gold standard. It means for every $1 you spend on marketing, you generate $3 in gross profit over the customer's lifespan.
Because you don't get to keep the entire ARPA. You have server costs, customer support, and onboarding expenses. Adjusting for gross margin reveals true profitability.

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