LeadAfrik

The SaaS health check, on one screen.

Average revenue per user, gross margin, monthly churn, and acquisition cost. Out the back: lifetime value, the LTV/CAC ratio, and how many months until each new customer pays back what they cost.

SO

Built and reviewed by Stephen Omukoko Okoth

Mathematical Economist · ex-Morgan Stanley FI · Equilar

Inputs

Customer economics

Currency

Verdict

5.5× LTV/CAC

Possibly underspending on growth — you could scale acquisition faster.

The 3:1 rule is heuristic, not law. Mature SaaS aims for 3–5×. Capital-light DTC can sustain 1.5–3×. Burn-fueled growth (early-stage venture) often runs sub-1× temporarily — that's a deliberate bet, not a healthy steady state.

Result

The numbers that matter

LTV

$ 2.5K

Gross profit over customer life

CAC

$ 450

LTV/CAC ratio

5.5×

CAC payback

7.2 months

Customer lifetime

40 months

At constant churn

Monthly contribution

$ 62

ARPU × Gross margin

Reference benchmarks

What's typical

  • SaaS (mid-market): LTV/CAC 3-5×, payback 12-18 months
  • SaaS (enterprise): LTV/CAC 4-7×, payback 18-24 months
  • DTC e-commerce: LTV/CAC 2-3×, payback 6-12 months
  • Marketplaces: LTV/CAC 3-5×, but cohort-dependent

Common questions

What is LTV/CAC?

LTV (lifetime value) ÷ CAC (customer acquisition cost). It's the SaaS health-check number — how many dollars of profit does each customer return for every dollar spent acquiring them?

What's a 'good' LTV/CAC?

3:1 is the canonical target — for every $1 of acquisition spend, you get $3 of lifetime margin. Above 3 means underspending on growth (you can scale faster). Below 1.5 means the unit economics don't work and growth burns more cash than it generates.

What is CAC payback period?

Months until a new customer's gross margin pays back what you spent acquiring them. <12 months = strong, 12-18 = acceptable, 18+ = capital-intensive growth that needs deep funding.

How is LTV calculated?

Standard formula: ARPU × Gross Margin % ÷ Monthly Churn %. So if a customer pays $100/mo at 80% margin and churns at 2% monthly: LTV = 100 × 0.8 ÷ 0.02 = $4,000. The math assumes constant churn, which is a simplification.