LTV:CAC Ratio Explained for SaaS Founders

By Vishesh Khurana — Feb 25, 2026

If investors could only look at one metric to evaluate your SaaS business, many would choose the LTV:CAC ratio.

What Is LTV:CAC?

LTV stands for Lifetime Value. CAC stands for Customer Acquisition Cost. The LTV:CAC ratio divides the first by the second.

What Good Looks Like

The benchmark for healthy SaaS economics is an LTV:CAC ratio of 3:1 or higher. Between 3:1 and 5:1 is the sweet spot.