--- title: "LTV/CAC Ratio: Formula + SaaS Calculator | Jirav" description: LTV:CAC is a ratio that compares the lifetime value of a customer to the cost of acquiring that customer. Here's how you calculate it with examples. --- ![](https://www.jirav.com/hs-fs/hubfs/Imported%20sitepage%20images/header-logo.png?width=98&name=header-logo.png) - [ Resources ](https://www.jirav.com/resources) - Menu / Resources - [Resource Center ](https://www.jirav.com/resources) Blogs and resources on all things finance, FP&A, and Jirav [Webinars ](https://www.jirav.com/webinars) Learn more about Jirav and FP&A from industry experts [Events ](https://www.jirav.com/events) See our upcoming calendar of events [Help Center ](https://help.jirav.com/) Guide on how to use Jirav - [ Company ](https://www.jirav.com/company) - Menu / Company - [About ](https://www.jirav.com/company) Learn about Jirav’s story and meet our leadership team [News Coverage ](https://www.jirav.com/news) See the latest news and highlights [Press ](https://www.jirav.com/press-releases) Recent company announcements and updates [Careers ](https://www.jirav.com/careers) View current job openings and learn how to join the Jirav Tower ![business_env](https://www.jirav.com/hubfs/business_env.svg) [ For Businesses ](https://www.jirav.com/reporting-planning-purpose-built-for-businesses) ![accounting_calc](https://www.jirav.com/hubfs/accounting_calc.svg) [ For Accounting & CFO Firms ](https://www.jirav.com/reporting-planning-purpose-built-for-accounting-cfo-advisory-firms) [ Get a Demo ](https://www.jirav.com/request-demo) [ Sign in ](https://app.jirav.com/) ![](https://www.jirav.com/hubfs/April2021/images/banner-shap.png) BLOG # LTV/CAC Ratio: Formula + SaaS Calculator | Jirav [![](https://www.jirav.com/hubfs/April2021/images/fb-icon.png) ](http://www.facebook.com/share.php?u=https://www.jirav.com/saas-metrics-library/customer-lifetime-value-customer-acquisition-costs/) [![](https://www.jirav.com/hubfs/April2021/images/tw-icon.png) ](https://twitter.com/share?url=https://www.jirav.com/saas-metrics-library/customer-lifetime-value-customer-acquisition-costs/) [![](https://www.jirav.com/hubfs/April2021/images/in-icon.png) ](http://www.linkedin.com/shareArticle?mini=true&url=https://www.jirav.com/saas-metrics-library/customer-lifetime-value-customer-acquisition-costs/&summary=&source=CeBIT) 1 minute read ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) ### What is LTV:CAC? LTV:CAC is a ratio that compares the lifetime value of a customer to the cost of acquiring that customer. It provides insights into the return on investment (ROI) of a company's marketing and sales efforts. ### Why LTV:CAC Is Important LTV:CAC is a critical metric, because it helps companies understand the balance between customer acquisition costs and customer lifetime value. A high LTV:CAC ratio indicates that the company is effectively acquiring customers at a low cost and that they have a high lifetime value, which ultimately leads to greater profitability. On the other hand, a low LTV:CAC ratio indicates that the company is either spending too much to acquire customers or that their customers have a low lifetime value. ### How to Calculate LTV:CAC To calculate LTV:CAC, a company must first determine the Lifetime Value (LTV) of a customer. LTV can be calculated by dividing the average revenue per account by the churn rate. Then, the company must determine the cost of acquiring a customer (CAC), which can be calculated by dividing the total cost of sales and marketing by the number of new customers acquired. Finally, LTV:CAC is calculated by dividing LTV by CAC. ##### Jirav Published April 25, 2023 ###### Related topics - [Metrics library](https://www.jirav.com/saas-metrics-library/tag/metrics-library) - [Saas metrics library](https://www.jirav.com/saas-metrics-library/tag/saas-metrics-library) ## Related blog posts ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Customer Acquisition Costs (CAC): How to Calculate | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/cac-customer-acquisition-costs) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Customer Growth Rate: What it is & Why it Matters | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/customer-growth-percentage) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### What is Downgrade MRR Rate & How to Calculate It | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/downgrade-percentage) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Churn Rate: What It Means & How to Calculate It | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/churn-percentage/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Customer Lifetime Value (LTV) Explained + Formula | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/customer-lifetime-value) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### CAC Payback: How to Calculate & Why It's Important | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/cac-payback-customer-acquisition-costs) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### What is Expansion Rate & Why Does it Matter? | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/expansion-percentage/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Average Contract Value: Definition + Calculation | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/average-contract-value/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Gross Revenue Retention: Meaning & How to Calculate | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/gross-revenue-retention/) [Load more](##) ## Let’s get started! 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