In the world of B2B SaaS, one metric often separates companies that thrive from those that constantly scramble for cash: the LTV:CAC ratio.
LTV stands for Customer Lifetime Value, the total profit a business expects to earn from a customer over the course of the relationship. CAC stands for Customer Acquisition Cost, the money spent to acquire that customer in the first place.
A healthy LTV:CAC ratio is usually considered to be 3:1 or higher. In simple terms, if you spend $1 to acquire a customer, you should earn at least $3 back in gross profit over time. Anything less than that signals your sales and marketing spend might be unsustainable. Anything much higher could mean you are under-investing in growth.
So, how do you improve this critical ratio? Let’s break down six ways to increase LTV and then look more closely at raising prices, which is often the fastest lever you can pull.
Price is not just about revenue, it is about perception.
Luxury brands have understood this for decades. If Chanel sold a purse for $20, nobody would buy it. The low price would strip it of its exclusivity and prestige. In fact, charging more can actually increase demand because higher prices signal higher value.
In B2B SaaS, customers often associate higher pricing with greater reliability, support, and long-term partnership. More importantly, higher-paying customers tend to be more committed, less churn-prone, and often easier to work with.
We will cover the mechanics of how to raise prices without scaring customers away later in this post.
Revenue does not matter if your costs eat it up.
If it costs $9 to make a $10 meal, you are left with just $1 of profit. But if smarter processes, automation, or vendor negotiation cut that cost to $2, suddenly you are making $8 profit on the same $10 sale.
In SaaS, fulfillment cost usually shows up as hosting, support, and onboarding. Automating onboarding with guided tutorials, streamlining support with AI chat, or optimizing infrastructure spend can free up massive margins without changing a single customer-facing element.
The lesson: sometimes the easiest way to improve LTV is not to make more, but to spend less.
Retention is king.
Getting a new customer can be 5–7 times more expensive than selling again to an existing one. Think of your favorite coffee shop: if you stop by twice a week instead of once, they have doubled their revenue from you without finding a new customer.
In SaaS, increasing frequency can mean encouraging customers to expand usage, add more seats, or adopt new modules regularly. Regular check-ins, usage reminders, or success coaching can nudge customers into deeper adoption and more frequent renewals.
Every extra month a customer stays on extends their lifetime value dramatically.
Upselling is about helping customers move to a bigger or better version of what they already love.
In consumer terms: “Would you like the 32-ounce soda instead of the 20-ounce?” In SaaS: “Would you like to upgrade from the Basic plan to the Pro plan for advanced features?”
Upsells work best when the added value feels obvious and irresistible. Maybe it is better analytics, premium support, or advanced integrations. The key is making the upsell a natural next step rather than a hard sell.
A well-designed upsell strategy can boost LTV without requiring any new leads.
Cross-selling is solving the next adjacent problem for your customer.
If you sell someone a soda, you also offer fries and a burger. In SaaS, that might mean selling an add-on like reporting tools, data integrations, or onboarding services.
A good cross-sell feels like you are anticipating the customer’s needs before they even articulate them. Not only does this increase revenue, but it also strengthens customer retention, because the more products or services they adopt, the harder it is to churn.
Cross-sells often carry higher margins than the core product, making them a double win.
Not every prospect will buy your top-tier offer, but that does not mean you have to lose them.
A personal trainer charging premium rates for one-on-one sessions might also offer group classes or downloadable workout plans at a lower price. Even if the customer cannot afford the main service, they still become a paying customer.
In SaaS, this might mean offering a slimmed-down version of your product for startups, or a free plan with paid add-ons. Another option is referral deals, where you send customers to a partner and earn a commission.
Downsells let you monetize “no’s” while still providing value.
Price increases are one of the fastest and most powerful ways to improve LTV. But raising prices poorly can backfire, scaring away customers or creating friction in your sales process. Here are six proven tactics to do it right.
Salespeople are creatures of habit. If they have been closing at $2,000, suddenly asking for $3,000 feels uncomfortable. To ease the transition, keep the familiar number in play.
For example: “It is $4,000 total. You can do two payments of $2,000.” The rep can still confidently use the $2,000 number, while the company benefits from a higher overall ticket. It is like teaching someone to swim in shallow water before pushing them into the deep end.
Anchoring is a classic psychological tool.
If you want to raise a product from $2,000 to $3,000, do not just present the $3,000. Instead, introduce $4,000 as the new anchor price, then offer $3,000 as the “deal.” Suddenly, $3,000 feels like a bargain in comparison.
It is the same tactic restaurants use with wine lists. The $200 bottle is not there to be bought, it is there to make the $100 bottle feel reasonable.
Here is the trick: raise the price, then make the old price look like a discount.
For instance: “It is $4,000 if you split payments, but $3,000 if you pay in full today.” The $3,000 is now reframed as a savings opportunity, even though it is higher than what you used to charge.
Airlines use this playbook all the time with baggage fees. You pay extra, but it still feels like you had a choice.
Uneven splits are another way to nudge customers toward paying more upfront.
Instead of $3,000 and $3,000, you could do $4,000 now and $2,000 later. This boosts cash flow early and makes the single-payment option more appealing. Customers think, “If I am already paying $4,000 now, I might as well just pay $5,000 and be done.”
Car dealerships use this trick constantly: “For just $50 more a month, you can drive away in the premium model.”
A scheduled price increase is one of the best sales tools you can give your team.
When you announce that prices are going up in two weeks, prospects who have been dragging their feet suddenly take action. It creates urgency and accelerates deals.
Netflix has mastered this: every time they announce a price hike, millions of new subscribers rush in before the change takes effect. The company gets a cash infusion and a clean transition to the new pricing.
Nobody wants to feel like they are paying more for the same thing.
If you are raising prices, tie the increase to something tangible: new features, faster service, improved onboarding, or customer success stories. Frame it as progress.
Apple is the master here. Each new iPhone comes with a few upgrades, and the higher price feels justified. Customers do not complain about paying more because they can see and feel the added value.
Your LTV:CAC ratio measures how efficiently you are turning customer acquisition spend into long-term value. To improve it:
When you raise prices, do it strategically: keep a home base for sales reps, anchor higher, offer prepayment discounts, use uneven splits, clear the pipeline, and justify with added value.
Get these right, and your LTV:CAC ratio can go from shaky to rock solid, fueling sustainable growth for your SaaS business.