Calculate how much it costs to acquire each new customer and evaluate your LTV:CAC ratio.
| Industry | Avg CAC | Target LTV:CAC |
|---|---|---|
| SaaS (B2B) | $200-500 | 3:1 or higher |
| SaaS (B2C) | $50-200 | 3:1 or higher |
| E-commerce | $10-50 | 3:1 to 5:1 |
| Financial Services | $200-1000 | 3:1+ |
A healthy business should have an LTV:CAC ratio of at least 3:1 — each customer generates 3× what it cost to acquire them. Below 1:1 means you're losing money on every customer. Above 5:1 might mean you're under-investing in growth.
How many months it takes to recoup the acquisition cost. Best-in-class SaaS companies achieve payback in under 12 months. Above 18 months is concerning.