LTV:CAC Ratio Calculator
Formula LTV ÷ CAC Result Ratio x : 1 Benchmark healthy 3–5 : 1
Inputs
LTV – gross profit
CAC
More levers · monthly contribution, for the payback time
Result
Max CAC at 3 : 1
$50.00
LTV ÷ 3
LTV:CAC as acquisition cost rises or falls
What the LTV to CAC ratio is actually asking
What a customer is worth set against what they cost — the one figure that says whether growth is worth funding.
The LTV:CAC ratio divides gross-profit lifetime value by acquisition cost, and it asks one question: does a customer return more than they cost to win, by enough of a margin to be worth funding? The profit basis is not optional — it is what investors expect, and revenue lifetime value inflates every ratio built on it. Same definition as the customer lifetime value calculator and the Marketing Cockpit.
Do not know your lifetime value or acquisition cost yet? Work them out here: Customer Lifetime Value Calculator ·Customer Acquisition Cost Calculator ·Break-Even ROAS Calculator ·Profit Margin Calculator
Gross profit per purchase = AOV × (margin ÷ 100)
LTV = gross profit per purchase × purchases per customer
LTV:CAC = LTV ÷ CAC
Four inputs, one verdict: a worked ratio
An $120 average order value at a 50 % margin, three purchases per customer, and $60 to win each one:
Reading the result: four zones, not three
The lower thresholds are the obvious ones. The fourth is the one that surprises people: a very high ratio is also a finding, because it says you could be buying more growth than you are.
The ratio says whether, not when
A ratio of 3:1 reached over four years is a different business from the same 3:1 reached in four months, and this figure cannot tell them apart. Enter your monthly contribution per customer below and the calculator adds the payback time = CAC ÷ monthly contribution. It is a quick estimate from direct contribution; the margin-adjusted version built from recurring revenue lives in the CAC payback calculator.
Moving the ratio is a question of capital efficiency
- Raise lifetime value: retention is the lever with the least resistance — every additional purchase cycle lands almost entirely in profit, because no new acquisition cost attaches to it.
- Lower acquisition cost: shift budget towards channels that compound rather than rent attention, and convert more of the traffic you already pay for. Both move the same numerator-free half of the fraction.
Frequently asked questions
What is the LTV:CAC ratio?
The LTV:CAC ratio sets customer lifetime value against customer acquisition cost. It answers whether a business model pays for itself over the long run: at 3:1, every dollar spent winning a customer comes back three times over the relationship.
How do you calculate the LTV:CAC ratio?
LTV:CAC = gross-profit lifetime value ÷ customer acquisition cost. Example: an LTV of $150 against a CAC of $50 gives 3.0 : 1. Use the profit figure, not revenue — revenue lifetime value makes every ratio look better than it is.
What is a good LTV:CAC ratio?
Three to one or better counts as healthy and fundable. Between 1:1 and 2:1 you are often still profitable but spending too much per customer. Below 1:1 you lose money on every acquisition. Above 5:1 is not simply better: it usually means you are under-investing in growth and could afford to buy more of it.
How do the ratio and CAC payback relate?
Both measure acquisition efficiency from different angles. The ratio says whether a customer is worth winning; payback says when — after how many months they have repaid what they cost. A quick estimate is CAC ÷ monthly contribution per customer: $50 of CAC against $25 a month is 2.0 months. A healthy model pairs a ratio of 3:1 or better with a short payback.