LTV:CAC Ratio Benchmark Tool
Enter your LTV:CAC ratio. See how it stacks up against B2B SaaS (P50 3.5x), B2C SaaS (3.0x), e-commerce (2.5x), and service businesses.
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How the Benchmark Works
LTV:CAC is the single most-cited unit economics metric, but interpretation depends heavily on business model. The benchmarks below use gross-profit-based LTV, not revenue-based.
1. Pick your segment
Benchmarks vary wildly across segments. The right comparison is your peer group, not the industry at large.
2. Enter your number
Your actual metric from last quarter or year. Use a trailing-12-month average if your numbers are volatile.
3. See your percentile
Result maps to a percentile against your peer segment's P10, P25, P50, P75, and P90 benchmarks.
Frequently Asked Questions
What is a good LTV:CAC ratio?
3:1 is the industry rule of thumb for B2B SaaS. Above 5:1 sometimes signals under-investment in growth. Below 1:1 means you lose money on every customer, only sustainable in land-and-expand models with strong expansion revenue.
How is LTV calculated?
LTV = (Average revenue per account × Gross margin) / Churn rate. Example: $100/month ARPA × 80% gross margin / 3% monthly churn = $2,667 LTV. Ensure LTV and CAC use consistent time units and LTV includes gross margin, not just revenue.
Why can a high LTV:CAC ratio be bad?
A ratio above 5:1 often means you're leaving growth on the table. If every $1 of CAC produces $5-7 of LTV, you can probably spend more on acquisition and still come out ahead. Investors interpret very high LTV:CAC as inability to deploy capital, not peak efficiency.
Should LTV use gross profit or revenue?
Gross profit. Revenue-based LTV overstates the economic value of a customer. Gross-profit-based LTV is the standard for unit economics. Businesses that use revenue-based LTV typically inflate LTV:CAC by 25-40%.
My LTV:CAC is 2:1. Is that a problem?
2:1 is below the B2B SaaS median (3.5:1) but not unworkable. Common causes: CAC inflated from sales motion mismatch, LTV compressed by high churn, pricing below market. Focus on the driver — if the problem is churn, LTV fixes come from retention investments; if it's CAC, fixes are sales motion and ICP.
How often should I recalculate LTV:CAC?
Quarterly at minimum. Monthly during rapid scaling. The ratio lags both CAC changes and LTV changes, so trend matters more than point-in-time value.
Where is the benchmark data sourced from?
Aggregated from ChartMogul, SaaS Capital annual survey, OpenView 2024 Product Benchmarks, and e-commerce industry reports. Medians reflect trailing-12-month data for 2024.
Does this work for freemium or product-led businesses?
Yes, but exclude free users from both LTV and CAC calculations, and track free-to-paid conversion separately. PLG businesses often show attractive LTV:CAC on paid cohorts but hide the cost of supporting the free layer.
LTV:CAC Across Your Entities
Track LTV:CAC per product, per ICP segment, per channel. Spot the mix hiding a broken segment.