SaaS Unit Economics Explained: LTV, CAC, and the LTV:CAC Ratio
Unit economics measure the revenue and cost associated with each customer. Customer Lifetime Value (LTV) is the total revenue a customer generates over their relationship with your company. Customer Acquisition Cost (CAC) is the total cost to acquire one customer. A healthy LTV:CAC ratio is 3:1 or higher — meaning each customer generates 3x what it cost to acquire them.