Every SaaS decision eventually comes back to four numbers: how much a customer is worth, how much they cost to acquire, how fast you earn that back, and whether you’re adding revenue faster than you lose it. Get these right and growth is a machine. Get them wrong and you can grow yourself straight out of business.
This free calculator runs all four – LTV:CAC ratio, the Rule of 40, CAC payback period, and the SaaS quick ratio. No signup, no email. Enter your numbers and each gauge tells you instantly whether you’re in the green, and what to do if you’re not.
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Below is how to read each number, what counts as healthy, and the mistakes that quietly wreck these metrics.
What is a good LTV:CAC ratio?
The shorthand everyone repeats is 3:1 — a customer should be worth about three times what you paid to acquire them. It’s a fine starting line, but treated as gospel it hides more than it reveals.
Two things break the 3:1 rule in practice. First, timing: a 3:1 ratio means nothing if it takes four years to collect that lifetime value while your CAC is due today. That’s why you never read LTV:CAC without also reading payback period. Second, churn math: LTV is calculated from your churn rate, and churn on a young SaaS is often understated because your oldest cohorts haven’t had time to leave yet. A flattering LTV usually just means your churn data is too new.
A ratio under 1:1 means you lose money on every customer — an emergency, not a growth problem. Around 3:1 is the healthy target. Push above 5:1 and you may actually be underspending on growth: efficient, but leaving market share for a competitor who’s willing to buy it.
Want the full breakdown? Read our guide on the LTV to CAC Ratio in SaaS.
What is the Rule of 40?
The Rule of 40 says a healthy SaaS company’s growth rate plus its profit margin should add up to at least 40. Grow 30% with a 10% margin, and you pass. Grow 60% and burn 20%, you still pass. The rule’s whole point is that growth and profitability are tradeable — early on you buy growth with margin, and as you mature you convert growth into profit.
Where founders misuse it: they cherry-pick the definition of “profit.” EBITDA, free cash flow, and operating margin can tell very different stories, and it’s tempting to reach for whichever one clears 40. Pick one measure and stay honest about it — the number is only useful if it’s consistent quarter to quarter.
A score below 20 signals you’re neither growing fast enough nor disciplined enough on spend. 20 to 40 is close but under the bar. 40 and above is the territory investors reward.
More on this: Rule of 40 in SaaS.
What is a good CAC payback period?
CAC payback is the number LTV:CAC pretends doesn’t exist: how many months of gross-margin revenue it takes to earn back what you spent acquiring a customer. It’s a cash-flow metric, and cash is what actually kills startups.
The benchmark most efficient SaaS companies aim for is under 12 months. Between 12 and 18 is workable but slow — it ties up cash you could be reinvesting. Over 18 months and you’re funding growth from a bucket with a hole in it; either acquisition is too expensive or your early revenue per customer is too thin.
One correction almost everyone forgets: use gross-margin revenue, not raw revenue. If you have 80% margins, only 80 cents of every revenue dollar goes toward paying back CAC. Skip that step and your payback looks a full fifth faster than it really is.
Deeper dive: CAC Payback Period.
What is the SaaS quick ratio?
The quick ratio measures growth efficiency: for every dollar of MRR you lose to churn and downgrades, how many dollars are you adding through new customers and expansions? The formula is (new MRR + expansion MRR) ÷ (churned MRR + contraction MRR).
A ratio under 1 means you’re shrinking — losing more than you add, no matter how good the top-of-funnel looks. 1 to 4 means you’re growing but leaking; a big chunk of every new dollar is just backfilling churn. 4 and above is the mark of durable, capital-efficient growth: you’re adding revenue far faster than it drains away.
This is the metric that exposes a “growing” company that’s actually running on a treadmill. Two SaaS businesses can both add $30k in new MRR — but if one loses $5k and the other loses $25k, they are not the same business, and the quick ratio is the only one of these four numbers that shows it at a glance.
Which of these four matters most?
None of them, in isolation — and that’s the honest answer most calculators won’t give you. LTV:CAC without payback hides a cash-flow trap. Rule of 40 without a churn number can flatter a leaky business. The metrics are a system: read together, they triangulate whether your growth is real and affordable, or borrowed against a future that may not arrive.
If you’re forced to start somewhere, start with the quick ratio and payback period. They’re the hardest to fool and the closest to cash. Vanity lives in LTV; truth lives in how fast the money comes back.