Businesssaas

LTV to CAC Ratio Calculator

The ratio of what a customer is worth to what they cost to acquire. Three times is the conventional floor; much above five usually means underspending rather than efficiency.

Also called: ltv to cac ratio, unit economics ratio.

LTV : CAC

4×: In the conventional healthy band of 3 to 5.

What that means

In the conventional healthy band of 3 to 5.

CAC as a share of LTV

25%

How this is calculated

Method and background

How this is calculated

Lifetime value divided by acquisition cost, both computed on the same basis. Gross profit, not revenue, or the ratio flatters itself by the margin. Below 1 you lose money on every customer. Around 3 is the usual target. Well above 5 more often signals that growth spend is being left on the table than that the business is unusually efficient.

ratio = ltv / cac

LTV: Gross-profit lifetime value (currency)
CAC: Fully-loaded acquisition cost (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

4x is healthy

Lifetime value: $200,000.00
Customer acquisition cost: $50,000.00

LTV : CAC4

arithmetic identity

Open this example

below 1 loses money per customer

Lifetime value: $40,000.00
Customer acquisition cost: $50,000.00

LTV : CAC0.8

boundary: unit economics do not work

Open this example

zero CAC

Lifetime value: $200,000.00
Customer acquisition cost: $0.00

LTV : CAC0

degenerate case: guarded division

Open this example