Unit Economics CAC:LTV Payback Analyzer
Analyze LTV, CAC, and payback periods to ensure sustainable growth. Enter values for instant results with step-by-step formulas.
Formula
LTV = (ARPU × Margin%) / Churn%
Lifetime Value (LTV) represents the total gross profit expected from a single customer. It is calculated by taking monthly profit (ARPU * Margin) and dividing by the monthly churn rate. The Payback Period is simply CAC divided by Monthly Profit.
Worked Examples
Example 1: SaaS Startup
Problem:CAC $250, ARPU $50, Margin 80%, Churn 3%.
Solution:Monthly Profit: $40. LTV: $40 / 0.03 = $1,333. Ratio: 5.3x. Payback: $250 / $40 = 6.25 months.
Result:Healthy (5.3x LTV:CAC)
Frequently Asked Questions
What is a 'good' LTV:CAC ratio?
3:1 is the industry standard benchmark for SaaS. 4:1 or 5:1 is excellent. Below 1:1, you are losing money. Between 1:1 and 3:1, you are likely burning cash too fast.
How do I calculate CAC?
Total Sales & Marketing Expense (Ad spend + Salaries + Commissions + Tools) divided by the Number of New Customers Acquired in that period.
Should I include organic leads in CAC?
For 'Blended CAC', yes. For 'Paid CAC', no. Blended CAC tells you overall business health; Paid CAC tells you if your ad channels are working.
How does Churn affect LTV?
It is the denominator. Halving your churn doubles your LTV. It is the most sensitive variable in the equation.