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LTV to CAC Ratio Calculator.

Calculates the ratio of Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC), a key metric for evaluating the profitability of customer acquisition.

Results update live as you type.
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Your inputs

How it works

  1. 1

    Enter the Customer Lifetime Value (LTV) in dollars.

  2. 2

    Enter the Customer Acquisition Cost (CAC) in dollars.

  3. 3

    The calculator divides LTV by CAC to get the ratio.

  4. 4

    Review the ratio: a ratio above 3 is generally considered good.

ltv / max(cac, 0.01)

Frequently asked questions

What is a good LTV to CAC ratio?

A ratio of 3:1 or higher is typically considered healthy, meaning the customer value is three times the acquisition cost. Ratios below 1 indicate you're losing money on each customer.

How is LTV calculated?

LTV is usually calculated as average purchase value × purchase frequency × customer lifespan. This calculator takes LTV as an input, so you need to compute it separately.

What if my CAC is zero?

The calculator uses a minimum CAC of 0.01 to avoid division by zero, but a zero CAC is unrealistic. Ensure you enter a positive CAC.

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LTV to CAC Ratio

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Estimate for general guidance only — verify important decisions with an appropriate professional.

How it works

Calculates the ratio of Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC), a key metric for evaluating the profitability of customer acquisition.

  1. Enter the Customer Lifetime Value (LTV) in dollars.
  2. Enter the Customer Acquisition Cost (CAC) in dollars.
  3. The calculator divides LTV by CAC to get the ratio.
  4. Review the ratio: a ratio above 3 is generally considered good.

Formulas

The math behind this calculator, written out so you can verify the result.

LTV to CAC Ratio

LTV / CAC

This ratio compares the total revenue a customer generates over their lifetime to the cost of acquiring them. A higher ratio indicates more efficient acquisition.

Example:

Input: LTV = $500, CAC = $100

Calculation: 500 / 100

Result: 5.0x

Real-world use cases

Where this calculation shows up in everyday life.

Evaluate Marketing ROI

Determine if your marketing spend is justified by the long-term value of acquired customers.

Example: If LTV is $600 and CAC is $150, ratio is 4x, indicating good ROI.

Set Acquisition Budgets

Use the ratio to decide how much you can afford to spend on acquiring a customer while staying profitable.

Example: If target ratio is 3 and LTV is $900, max CAC is $300.

Compare Customer Segments

Calculate the ratio for different customer groups to identify which segments are most profitable.

Example: Compare high-value vs. low-value customers to allocate resources.

Tips and common mistakes

Tips

  • Aim for a ratio of at least 3:1 to ensure healthy margins.
  • Track LTV and CAC over time to spot trends.
  • Include all acquisition costs (ad spend, sales team, tools) in CAC.
  • Use cohort analysis to get accurate LTV.

Common Mistakes to Avoid

  • Forgetting to include all acquisition costs in CAC.
  • Using a short customer lifespan, underestimating LTV.
  • Ignoring the time value of money when calculating LTV.

Assumptions and limitations

  • Use the stated inputs and units.
  • Results are estimates for planning and education.
  • Check measurements and source data before making an important decision.