LTV:CAC for PLG vs sales-led: why your CAC is probably wrong
LTV:CAC compares customer lifetime value to acquisition cost; the healthy benchmark is 3 or higher. But CAC means different things by go-to-market: in product-led growth it is mostly marketing spend, in sales-led it is mostly salaries. Leave the salaries out and your CAC looks artificially low and your ratio inflated.
The ratio and the benchmark
LTV:CAC divides the lifetime value of a customer by the cost to acquire one. Three-to-one or higher is the common healthy mark; below three you are paying too much to grow. A ratio far above that — say fifteen-to-one — is not automatically great: it often means CAC is undercounted, or that you are under-investing in growth. Early-stage, CAC payback under about eighteen months is the companion check.
PLG: CAC is mostly spend
In product-led growth customers largely sign up themselves. CAC is roughly your marketing and ad spend divided by new customers won, with little salary cost attached. Here the simple formula holds reasonably well, and a low CAC is usually real.
Sales-led: CAC is mostly salaries
In sales-led growth the biggest acquisition cost is people: reps, SDRs, and the founder's own selling time. If you compute CAC from ad spend alone you leave out the largest cost, so CAC comes out too low, LTV:CAC looks inflated and payback looks rosier than it is. The fix is to include the fully-loaded fraction of every salary that goes into winning customers.
This is a common trap, so Startkeel flags it: when a model looks sales-led but no sales salaries are in the acquisition cost, the LTV:CAC and payback verdicts are treated with caution rather than shown as healthy.
How to fix your CAC
Add up the fully-loaded cost of acquiring customers in a period — ad and marketing spend plus the salary fraction of everyone who works on acquisition — and divide by the new customers won. Then re-check LTV:CAC and payback against the benchmarks honestly.
FAQ
What should be included in CAC?
Every fully-loaded cost to acquire a customer in a period: marketing and ad spend plus the salary fraction of the sales and marketing people involved, divided by the number of new customers won.
My LTV:CAC is 20 — is that good?
Be careful. A very high ratio often means CAC is undercounted (missing sales salaries) or that you are under-investing in growth. Recheck what is inside your CAC before treating it as a win.
Related guides
Related tools
- LTV:CAC Calculator — Is each customer worth more than they cost?
- CAC Payback Calculator — How long until a customer pays back what they cost?
- See all: Unit economics
Related benchmarks
Check your own numbers.
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Last updated: June 25, 2026. For information only — not financial advice.