ARPA vs LTV to CAC Ratio
What is the difference between ARPA and LTV to CAC Ratio? Side-by-side definitions, formulas, and benchmarks for two of the most-watched SaaS metrics.
Definitions
What is ARPA?
ARPA is average revenue per account, the average recurring revenue generated per customer account — total MRR divided by the number of active accounts, typically measured monthly. It is a core input to LTV and unit-economics calculations.
What is LTV to CAC Ratio?
LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to evaluate acquisition efficiency.
ARPA vs LTV to CAC Ratio at a Glance
| ARPA | LTV to CAC Ratio | |
|---|---|---|
| Category | SaaS terminology | Metrics |
| Formula | ARPA = MRR / Total Number of Accounts | LTV:CAC Ratio = LTV / CAC |
| Benchmarks | — | good: 3 x; great: 6 x |
| Calculator | — | LTV to CAC Ratio calculator |
When Each Matters
ARPA and LTV to CAC Ratio answer different questions. ARPA is average revenue per account, the average recurring revenue generated per customer account — total MRR divided by the number of active accounts, typically measured monthly. It is a core input to LTV and unit-economics calculations. LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to evaluate acquisition efficiency. In practice, healthy SaaS operators watch both, because each one catches failure modes the other misses.