Evaluate the return on customer acquisition and the health of your unit economics
How it works
Divides customer lifetime value by acquisition cost to show how much gross profit each dollar of acquisition spend returns. It is the headline efficiency metric investors use to judge whether a growth engine is sustainable.
Ratio = LTV / CAC
LTVgross-margin lifetime value per customerCACfully loaded cost to acquire one customer
- 2,133 / 600
- The commonly cited benchmark is 3:1. Below 1:1 you lose money on every customer; sustained readings above 5:1 usually mean you are underspending and leaving growth on the table.
- Both inputs must use gross profit, not revenue, or the ratio is inflated by exactly your cost of service.
- The ratio ignores timing. A 3:1 ratio recovered over 5 years is a much weaker business than 3:1 recovered in 12 months, which is why CAC payback period is always reported alongside it.
- Segment it. A healthy blended 3:1 often hides an enterprise segment at 6:1 subsidising an SMB segment losing money.
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Frequently Asked Questions
Yes. Ltv Cac Ratio costs nothing, needs no account, and runs right in your browser. There is no paywall, no watermark on the results, and no limit on how many times you can run the numbers.
Ltv Cac Ratio uses the standard formula for this kind of calculation, so the output is only as good as the figures you type in. Rates, fees, and rules in finance shift over time, and we review the underlying assumptions on a regular schedule; check the "Last reviewed" date above for the most recent pass. Spotted something off? There's a feedback button in the bottom-right corner.