LTV:CAC Ratio Calculator
Compare customer lifetime value to acquisition cost.
Results update as you type.
How it works
The LTV to CAC ratio compares how much a customer is worth over their lifetime with how much it costs to acquire them, and this calculator computes it from those two figures. You enter the customer lifetime value, the total profit or revenue you expect from an average customer over the whole relationship, and the customer acquisition cost, the average spend on sales and marketing to win one customer, and it returns the ratio. This single number is one of the most important gauges of a business model's health, especially for subscription and SaaS companies. A ratio around three to one is widely regarded as healthy: each customer returns three times what they cost to acquire, leaving room for other expenses and profit. A ratio below one means you lose money on every customer, an unsustainable position. A very high ratio, well above five to one, can signal you are under-investing in growth and could profitably acquire more customers. Investors scrutinise this ratio when evaluating startups because it reveals whether growth is efficient and scalable. Improve it by raising lifetime value through retention and upsells, or by lowering acquisition cost through better targeting. Enter your LTV and CAC to compute the ratio.
LTV:CAC = lifetime value / acquisition cost
The LTV to CAC ratio divides the average lifetime value of a customer by the average cost to acquire one. It shows how many dollars of long-term value each dollar of acquisition spend returns. A ratio of three to one is a common healthy benchmark, meaning each customer is worth three times what it costs to win them.
Source:Unit economics
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter customer lifetime value (ltv) and customer acquisition cost (cac).
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
LTV:CAC ratio updates instantly as you type — no button to press.
Frequently asked questions
What is the LTV to CAC ratio?
The LTV to CAC ratio compares the lifetime value of a customer to the cost of acquiring one, found by dividing lifetime value by acquisition cost. It shows how many dollars of value each acquisition dollar generates, making it a core measure of whether a business can grow profitably and sustainably.
What is a good LTV to CAC ratio?
A ratio of about three to one is the widely cited healthy benchmark, meaning each customer is worth three times what they cost to acquire. Below one is unsustainable, since you lose money per customer. Much above five to one may mean you are under-investing in growth and could profitably spend more to acquire customers.
How do I calculate customer lifetime value?
Lifetime value estimates the total profit from an average customer over the whole relationship. A simple version multiplies average revenue per customer by average customer lifespan, adjusted for margin. For subscription businesses it often equals average monthly revenue times gross margin divided by the monthly churn rate. Use a consistent method so your ratio is meaningful.
What does a ratio below one mean?
A ratio below one means you spend more to acquire a customer than that customer is ever worth, so you lose money on each one. This is unsustainable and signals a broken business model that needs urgent attention, either by cutting acquisition costs, improving retention and lifetime value, or rethinking pricing and targeting.
How can I improve the ratio?
Raise the numerator by increasing lifetime value through better retention, upsells, cross-sells, and higher prices, or lower the denominator by reducing acquisition cost through sharper targeting, higher conversion rates, and more efficient channels. Because the ratio depends on both, improvements to either lift it, and small gains on both sides compound.