SaaS Pricing Calculator
Price for your LTV:CAC target.
Calculate the SaaS price needed to hit your LTV:CAC target from acquisition cost, gross margin, and contract length. Free — no signup.
What this tool does
This calculator determines the monthly price point needed to reach a target LTV-to-CAC ratio for a subscription business. It works backwards from your desired ratio: it calculates the lifetime value your customers must generate, then derives the monthly price required to hit that target given your gross margin and contract length. The result shows what your monthly fee needs to be, expressed in your currency. Customer acquisition cost and your target ratio are the primary drivers—higher acquisition costs or more ambitious ratio targets will push the required price up. A typical scenario: a SaaS company with a 500 customer acquisition cost and a 3:1 target ratio can use this to set baseline pricing. The calculator assumes consistent gross margins over the contract term and does not account for churn, upsell revenue, expansion, or operational expenses beyond the gross margin figure. The output is for pricing illustration only.
Quick answer: with the default values, the result is $78.13 (Required Monthly Price). Adjust the values below for your own figures.
Enter Values
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
SaaS pricing is backwards from most products: you set the price from the cost of acquiring the customer, not the cost of building the software. If it costs 500 to acquire a customer and you want a 3:1 LTV:CAC ratio, that customer needs to deliver 1,500 in lifetime gross margin. Divide by contract length to get the required monthly contribution, then divide by gross margin percentage to set the list price.
500 CAC × 3 target ratio = 1,500 required LTV. Over a 24-month contract, that's 62.50/month gross margin. At 80% gross margin the price lands at 78/month. A commonly cited rule of thumb treats 3:1 LTV:CAC as a floor and 5:1 as healthy, while venture-backed firms often run closer to 1:1 early on.
This method assumes steady retention. If churn is high (monthly churn above 3%), effective contract length drops and prices need raising. Annual contracts paid upfront also effectively lengthen LTV by reducing churn risk, which is why most SaaS companies discount 10-20% for annual billing.
A worked example
With the defaults: customer acquisition cost of 500, target ltv:cac ratio of 3, gross margin of 80%, avg contract length of 24 months. The tool returns 78.13. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.
What moves the number most
The result responds to Customer Acquisition Cost, Target LTV:CAC Ratio, Gross Margin %, and Avg Contract Length (months). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.
The formula behind this
Required LTV = CAC × target ratio. Monthly gross margin needed = required LTV ÷ contract months. Price = monthly margin ÷ gross margin %. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.
What the result tells you
The calculation distils your inputs into a single figure. Its value is in seeing how that figure shifts as the inputs change.
What this doesn't capture
The result reflects only the inputs you provide and the assumptions built into the formula. It is a simplified model rather than a complete picture, and factors specific to your situation may matter just as much.
£500 CAC × 3x ratio over 24 months at 80% margin = $78.13.
Inputs
| Required LTV | $1,500.00 |
|---|---|
| Monthly Contribution | $62.50 |
| Target LTV:CAC | 3x |
| Annual Price | $937.50 |
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator derives the required subscription price by working backward from a target LTV:CAC ratio. It first multiplies your customer acquisition cost by your desired LTV:CAC ratio to determine the required lifetime value. Next, it divides this required LTV by the average contract length in months to find the monthly gross margin needed per customer. Finally, it converts this monthly margin into a price by dividing by your gross margin percentage and multiplying by 100. The model assumes a linear revenue stream across the contract term, constant gross margin throughout the customer lifecycle, and that all customers remain active for the full contract length. It does not account for churn, expansion revenue, acquisition costs that vary by cohort, or changes in pricing over time.
References
Frequently Asked Questions
What is LTV:CAC?
Price monthly or annually?
What if my gross margin is lower?
Does this include value-based pricing?
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