Cost Per Tenant is one metric in a broader framework. Understanding how it connects to the standard SaaS financial vocabulary is essential for communicating with finance, investors, and leadership.
Gross Margin
Gross Margin % = (Revenue − Cost of Goods Sold) / Revenue × 100
For SaaS, Cost of Goods Sold (COGS) includes: cloud infrastructure, third-party API costs (e.g., Stripe, Twilio, SendGrid), and the cost of customer support directly tied to delivering the service. It does NOT include sales, marketing, or R&D.
Healthy SaaS gross margins are typically 65–80%. If your gross margin is below 50%, your pricing model or architecture has a structural problem.
Customer Acquisition Cost (CAC)
The total sales and marketing spend divided by the number of new customers acquired in a period. If you spent $100,000 on sales and marketing and acquired 50 customers, CAC = $2,000.
Customer Lifetime Value (LTV)
LTV = Average Monthly Revenue Per Customer × Average Customer Lifetime (months) × Gross Margin %
If a customer pays $500/month, stays for 24 months, and your gross margin is 70%:
LTV = $500 × 24 × 0.70 = $8,400
The LTV:CAC Ratio
The single most important SaaS health metric. A ratio of 3:1 or higher is considered healthy — meaning you earn $3 in lifetime value for every $1 spent acquiring a customer. Below 1:1 means you are destroying value with every sale.
LTV:CAC = $8,400 / $2,000 = 4.2 ✓ (healthy)
How CPT Connects Everything
Cost Per Tenant directly determines Gross Margin, which flows into LTV. If your CPT is too high, your gross margin collapses, your LTV shrinks, and your LTV:CAC ratio falls below the threshold that makes the business viable. This is why CPT is not just an engineering metric — it is a business survival metric.