Phase 1 · Core Sovereign Layer
SaaS Unit Economics Calculator
See whether your growth engine actually compounds — or quietly burns cash. Drag any input and watch LTV, CAC payback, and your MRR ceiling recalculate instantly.
What is a good LTV to CAC ratio?
The widely cited benchmark for SaaS is 3:1 — a customer should return at least three times what it cost to acquire them. Below 1:1 you lose money on every sale; between 1:1 and 3:1 the unit economics are too thin to fund growth profitably. Above 5:1 usually signals you are under-investing in sales and marketing.
- Use gross-margin-adjusted LTV, not revenue: LTV = ARPU × gross margin ÷ monthly churn, then LTV : CAC = LTV ÷ CAC.
- Average customer lifetime is the reciprocal of churn (1 ÷ monthly churn), so cutting churn from 5% to 3% stretches lifetime from 20 to 33 months — a 66% LTV jump.
- Read the ratio alongside CAC payback = CAC ÷ (ARPU × gross margin), the months of gross profit needed to recover the acquisition spend.
- A ratio is not a growth plan: at a fixed acquisition pace your base plateaus where new customers only replace churned ones.
Under the hood
The math, fully exposed
No black box. Every output above comes from these formulas, computed live in your browser:
Customer lifetime = 1 ÷ monthly churn
Gross-margin LTV = ARPU × gross margin ÷ monthly churn
LTV : CAC = Gross-margin LTV ÷ CAC
CAC payback (months) = CAC ÷ (ARPU × gross margin)
MRR growth ceiling = (New customers ÷ monthly churn) × ARPU
- Why gross margin matters: a $50/mo customer at 80% margin contributes $40 of gross profit per month — that is the cash you actually keep to recover CAC and fund growth.
- Why churn dominates: lifetime is the reciprocal of churn, so cutting churn from 5% to 3% extends lifetime from 20 to 33 months — a 66% LTV jump from a 2-point move.
- The ceiling is structural: at a fixed acquisition pace, your base plateaus where inflow equals churn. Raising the ceiling requires faster acquisition or lower churn — discounting ARPU alone won't do it.
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Answers
Frequently asked questions
What is a healthy LTV:CAC ratio for a SaaS business?
The widely cited benchmark is 3:1. Below 1:1 you lose money on every customer; between 1:1 and 3:1 your unit economics are too thin to fund growth profitably. A ratio above 5:1 is often a sign you are under-investing in sales and marketing and leaving growth on the table.
Why does this calculator use gross-margin-adjusted LTV?
Revenue is not profit. Serving a customer carries hosting, support and payment-processing costs. We multiply lifetime revenue by your gross margin so LTV reflects the cash a customer actually contributes — the only honest number to compare against CAC.
What is the "MRR growth ceiling"?
At a constant acquisition pace and churn rate, your customer base does not grow forever — new customers eventually only replace churned ones. That equilibrium is new customers ÷ churn rate. The MRR ceiling is that customer count times ARPU. To raise the ceiling you must either acquire faster or cut churn.
How is CAC payback period calculated?
CAC payback is the number of months of gross profit needed to recover what you spent to acquire a customer: CAC ÷ (ARPU × gross margin). Top-tier SaaS recovers CAC in under 12 months; under 6 is exceptional and lets you grow with far less capital.