CD Ratio Calculator

CD Ratio Calculator helps businesses assess how efficiently they're acquiring new customers compared to their revenue growth. It's essential for understanding customer acquisition efficiency and business scalability.

Input Parameters

Calculation Results

CD Ratio Calculation

CD Ratio = MRR Growth / Average Revenue per Customer

Enter the input values and click "Calculate" to see the result.

Where:
MRR Growth: The monthly increase in recurring revenue
Average Revenue per Customer: The average revenue generated per customer

CD Ratio Calculator Calculator Usage Guide

Learn how to use the CD Ratio Calculator to optimize your customer acquisition strategy

What is CD Ratio?

The Customer Development Ratio (CD Ratio) is a critical metric for SaaS and subscription-based businesses that measures how efficiently they're acquiring new customers relative to their revenue growth. It's calculated as:

CD Ratio = MRR Growth / Average Revenue per Customer

How to Use This Calculator

  1. Enter your Monthly Recurring Revenue (MRR) Growth - this is the monthly increase in recurring revenue from new customers.
  2. Enter your Average Revenue per Customer - this is the average amount of revenue generated from each customer.
  3. Click the "Calculate" button to see your CD Ratio and interpretation.

Interpreting Your Results

  • CD Ratio < 0.5: Indicates that your company is gaining revenue slower than it's acquiring new customers, which may be unsustainable in the long term.
  • CD Ratio = 0.5 - 2: Represents a healthy balance between customer acquisition and revenue growth.
  • CD Ratio > 2: Shows rapid growth by acquiring new customers faster than revenue growth, which could indicate strong expansion but may also require scaling customer support.

Practical Applications

The CD Ratio helps businesses:

  • Optimize marketing spend by focusing on channels that deliver the best customer acquisition efficiency
  • Compare different business units or product lines
  • Makes informed decisions about scaling operations
  • Identify potential red flags in growth patterns

Note: This calculator uses a simplified formula. For more comprehensive analysis, consider additional factors like customer lifetime value, churn rate, and acquisition cost.