LTV vs CAC: SaaS Customer Economics
LTV estimates gross profit from a customer over its lifetime. CAC measures the cost to acquire that customer.
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Use LTV and CAC together to test whether customer acquisition is economically sustainable.
LTV is best for estimating long-term customer value.
CAC is best for measuring sales and marketing efficiency.
High LTV does not help if payback is too slow for available cash.
Unit economics screen
If a customer is worth $9,000 in gross profit and costs $3,000 to acquire, LTV:CAC is 3.0x before considering payback timing.
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Frequently Asked Questions
When should I use LTV vs CAC?
Use LTV and CAC together to test whether customer acquisition is economically sustainable.
Which calculator should I open next?
Start with LTV Calculator, then use the related calculator workflow to validate the result from another angle.
Use this guide with the full SaaS Customer Economics Calculators
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