Frequently Asked Questions
What is a healthy LTV:CAC ratio?
A ratio of at least 3 to 1 is the common benchmark for a healthy subscription business. Below 1 to 1 means you lose money on each customer, while a very high ratio can signal underinvestment in growth.
Should I use revenue or gross margin in LTV?
Always use gross-margin dollars, not raw revenue. Using revenue ignores hosting, support, and delivery costs and badly overstates lifetime value.
What CAC payback period is considered good?
Under 12 months is generally healthy for most subscription businesses, and under 6 months is excellent because it frees up cash to reinvest in growth.
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Business Information Disclaimer: Estimates only. Not professional business advice.
This calculator provides estimates for informational purposes only. Business results vary by industry, market conditions, and execution. Not a substitute for professional business consulting, accounting, or legal advice. Consult qualified professionals before making business decisions.