Unit economicsMetric 14 of 35
LTV : CAC Ratio
The SaaS unit-economics ratio that compares lifetime value with acquisition cost.
How many dollars of lifetime gross profit you generate per dollar spent acquiring a customer. The most condensed unit-economics summary in SaaS.
Formula
LTV : CAC = LTV ÷ CACWorked example
LTV $8,000 ÷ CAC $1,200 = 6.7:1 — strong.
Benchmark
TargetExcellent
5:1+
Healthy
3:1
Subscale
< 1.5:1
Why it matters
Below 3:1 typically means either you're spending too much, you're charging too little, or churn is too high — investigate before scaling. Above 5:1 may mean you're underinvesting in growth and could acquire faster. The ratio is most useful as a directional signal, not a hard target.
Common mistakes
- Optimising the ratio by holding back spend (good for the slide, bad for growth).
- Comparing your ratio to a different ICP without adjustment.
- Trusting LTV calculated on revenue instead of gross profit — it inflates the numerator.
Tracked in FlowMRR
Not a native chart — combine FlowMRR's LTV inputs (ARPU, churn, margin) with your own CAC to get this ratio.