LTV:CAC of 3:1 is healthy. Below 1:1 = losing money. Above 5:1 = may be underinvesting in growth.
By The Ad Spend
The ratio comparing customer lifetime value to acquisition cost. Primary metric for unit economics and business sustainability.
Formula
LTV ÷ CAC
Benchmark range
Healthy SaaS: 3:1 or higher. Below 1:1 = losing money per customer. Above 5:1 = potentially underinvesting in growth.
Why it matters
3:1 means you earn $3 for every $1 acquiring customers. Below 3:1: either increase LTV (pricing, retention, upsells) or decrease CAC (better targeting, conversion optimization). Above 5:1 might mean you're leaving growth on the table.
