Are You Profitable Per Customer?

LTV:CAC is the single most-cited ratio in SaaS. It compares the gross-margin lifetime value of a customer (LTV) against the fully-loaded cost to acquire that customer (CAC). The ratio tells you whether your growth engine is creating value or burning it. This calculator computes all four numbers (LTV, CAC, the ratio, and CAC payback period) from five inputs, with top-quartile benchmarks built in.

LTV = Average revenue per account (ARPA) × Gross margin % ÷ Monthly churn rate. CAC = Total sales + marketing spend ÷ New customers acquired in the same period. The ratio is just LTV divided by CAC; the payback period is CAC divided by monthly gross profit per customer.

Two common mistakes: (1) using revenue instead of gross-margin-adjusted contribution; (2) calculating CAC blended across organic and paid instead of paid-only. Both inflate LTV and deflate CAC, making the ratio look healthier than it is.

The widely-used benchmark, popularized by David Skok's SaaS Metrics 2.0, says 3:1 is healthy and 1:1 is unsustainable. Above 5:1 you're under-investing in growth and leaving share on the table for competitors. CAC payback under 12 months is the practical floor for venture-backed growth; under 18 months works for capital- efficient SaaS per the OpenView SaaS Benchmarks Report.

Use this every quarter once you have at least 100 paying customers and 6 months of churn data. Earlier than that, the numbers are pure noise: monthly churn calculated from a 12- customer base swings 8% per cancellation, which distorts LTV by multiples. For pre-product-market-fit and early-stage teams, the automation risks framework is more useful than this calculator.

Developer-led products usually have higher organic acquisition (so blended CAC undercounts the real paid-only cost), longer evaluation cycles (so the payback period skews longer than B2C SaaS benchmarks suggest), and high expansion revenue from bottoms-up land-and-expand motions (so the LTV component should include the full expansion curve, not just initial contract value). For DevTools at Series A scale, target LTV:CAC of 4:1 or higher to leave headroom for marketing experimentation.