CAC vs LTV
What is the difference between CAC and LTV? Side-by-side definitions, formulas, and benchmarks for two of the most-watched SaaS metrics.
Definitions
What is CAC?
CAC is customer acquisition cost, the sales and marketing investment required to acquire customers.
What is LTV?
LTV is customer lifetime value, the estimated revenue value of a customer over their lifespan.
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CAC vs LTV at a Glance
| CAC | LTV | |
|---|---|---|
| Category | Metrics | Metrics |
| Formula | Overall CAC = S&M Spend / New Customers | LTV = ARPA × (1 / CHURN) |
| Benchmarks | — | — |
| Calculator | CAC calculator | LTV calculator |
When Each Matters
CAC and LTV answer different questions. CAC is customer acquisition cost, the sales and marketing investment required to acquire customers. LTV is customer lifetime value, the estimated revenue value of a customer over their lifespan. In practice, healthy SaaS operators watch both, because each one catches failure modes the other misses.