Calculate LTV, CAC, LTV:CAC ratio, and growth projections for your SaaS business.
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LTV = (ARPU × Gross Margin %) / Monthly Churn Rate. LTV:CAC = LTV / CAC. CAC payback = CAC / (ARPU × Gross Margin %). Target LTV:CAC ≥ 3x and payback < 12 months.
Target 3:1 minimum. 5:1+ is great. Below 3:1 means you're spending too much to acquire customers or they're churning too fast.
LTV = Average Revenue Per User ÷ Monthly Churn Rate. At $50 ARPU and 2% monthly churn: LTV = $50 ÷ 0.02 = $2,500.
CAC Payback = CAC ÷ Monthly Gross Profit per Customer. Under 12 months is good for B2C. Under 18 months for B2B. Under 24 months for enterprise.
Under 2%/month (22%/year) for SMB SaaS. Under 1% for mid-market. Under 0.5% for enterprise. High churn kills growth — retention is the most important SaaS metric.
SaaS Gross Margin = (MRR - Direct COGS) ÷ MRR. COGS: hosting, support, third-party tools. High-growth SaaS targets 70-80%+ gross margin.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.