LTV to CAC Ratio vs Valuation
What is the difference between LTV to CAC Ratio and Valuation? Side-by-side definitions, formulas, and benchmarks for two of the most-watched SaaS metrics.
Definitions
What is LTV to CAC Ratio?
LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to evaluate acquisition efficiency.
Full LTV to CAC Ratio definition →
What is Valuation?
Valuation is the estimated enterprise or equity value of a SaaS company, often informed by revenue multiples, growth, efficiency, and market conditions.
LTV to CAC Ratio vs Valuation at a Glance
| LTV to CAC Ratio | Valuation | |
|---|---|---|
| Category | Metrics | Fundraising |
| Formula | LTV:CAC Ratio = LTV / CAC | Valuation = ARR × Revenue Multiple |
| Benchmarks | good: 3 x; great: 6 x | — |
| Calculator | LTV to CAC Ratio calculator | Valuation calculator |
When Each Matters
LTV to CAC Ratio and Valuation answer different questions. LTV to CAC Ratio compares customer lifetime value against customer acquisition cost to evaluate acquisition efficiency. Valuation is the estimated enterprise or equity value of a SaaS company, often informed by revenue multiples, growth, efficiency, and market conditions. In practice, healthy SaaS operators watch both, because each one catches failure modes the other misses.