Calculate your customer acquisition cost (CAC), LTV:CAC ratio, and payback period. See whether your growth economics are sustainable and benchmark against SaaS and e-commerce norms.
CAC = Total sales and marketing costs ÷ New customers acquired
CAC payback period = CAC ÷ Monthly gross margin per customer
Worked example: Monthly sales and marketing costs: 150,000. New customers acquired: 300. CAC = 500. Monthly gross margin per customer: 80 (subscription 120 × 67% gross margin). CAC payback = 500/80 = 6.25 months. LTV at 24-month average customer life: 80 × 24 = 1,920. LTV:CAC = 1,920/500 = 3.84× — healthy unit economics.
Everything: paid ad spend, organic marketing salaries, SEO tools, agency fees, sales team salaries and commissions, CRM costs, and any marketing overhead.
3:1 is the widely-cited minimum benchmark. Below 1:1 means you're destroying value. Above 5:1 often means you're under-investing in growth.
LTV = Average Purchase Value × Purchase Frequency × Average Customer Lifespan. For subscriptions: LTV = Average MRR per customer ÷ Monthly Churn Rate.