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.
Illustrative comparisons
TargetThese unsourced ranges are illustrative scenarios, not measured industry benchmarks, percentiles or recommended targets. Their qualitative labels are editorial interpretations. Compare your own cohorts using the same segment, period, currency and measurement basis.
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.