Question 1

How do I calculate LTV:CAC ratio for SaaS?

Accepted Answer

LTV:CAC ratio is calculated by dividing Customer Lifetime Value (LTV) by Customer Acquisition Cost (CAC). LTV = Monthly Recurring Revenue × Customer Lifetime in Months. CAC = Total cost to acquire a customer including sales commissions, marketing spend, and other acquisition costs. A healthy LTV:CAC ratio for SaaS companies is 3:1 or higher.

Question 2

What is a good CAC payback period for B2B SaaS?

Accepted Answer

A good CAC payback period for B2B SaaS is under 12 months. This means you recover the cost of acquiring a customer within a year of their subscription. Elite SaaS companies often achieve payback periods of 6-9 months. Longer payback periods (18+ months) can strain cash flow and indicate unit economics issues.

Question 3

How do I set sales quotas based on revenue goals?

Accepted Answer

To set sales quotas, divide your annual revenue goal by the number of sales reps to get each rep's annual quota. Then divide by 12 for monthly quota. Factor in your average contract value (ACV) to determine how many deals each rep needs to close. This calculator automatically computes these metrics based on your inputs.

Question 4

What sales commission rate should I use for SaaS?

Accepted Answer

Typical SaaS sales commission rates range from 10-25% of Annual Contract Value (ACV). 10-15% is common for transactional sales with shorter cycles. 15-20% is typical for mid-market deals. 20-25% may be used for enterprise sales with longer cycles. The right rate depends on your unit economics—use this calculator to model different scenarios.

Question 5

How many customers do I need to hit my revenue goal?

Accepted Answer

Divide your annual revenue goal by your Average Contract Value (ACV) to get the number of new customers needed per year. For monthly targets, divide by 12. This calculator factors in your pricing, win rates, and sales cycle to show exactly how many leads, demos, and closes you need.