LTV:CAC Ratio Calculator

What is LTV:CAC?

The LTV:CAC ratio compares customer lifetime gross profit to the cost of acquiring that customer. Investors use it as a quick read on whether acquisition economics support scalable growth.

Formula

Version v1. See methodology and the public formula repo for sources and change history.

Worked example

Using the default example inputs (LTV: $12,500; CAC: $5,000), LTV:CAC equals 2.5:1 (LTV:CAC). Ratios above 3x are typically healthy, but very high ratios can signal under-investment.

What good looks like

Many operators target roughly 3:1 or better, but context matters: very high ratios can mean you should invest more in growth; very low ratios warn that payback or retention is weak.

Directional guidance only, not a cohort benchmark claim. Premium cohort bands appear when sample thresholds are met for your profile.

FAQ

What is LTV:CAC?

The LTV:CAC ratio compares customer lifetime gross profit to the cost of acquiring that customer. Investors use it as a quick read on whether acquisition economics support scalable growth.

What is the LTV:CAC formula?

LTV:CAC = LTV / CAC

Should LTV and CAC use the same period?

Use definitions that match your operating model. LTV is often a modeled lifetime; CAC should reflect recent acquisition efficiency.

What if LTV:CAC is above 5?

Strong unit economics. Verify you are not under-spending on acquisition or overestimating LTV via low churn inputs.

Does this include expansion revenue?

Only if your LTV input already reflects expansion. NRR-focused teams often pair this ratio with retention calculators.