Marketing
LTV:CAC Ratio Calculator
Compare customer lifetime value with customer acquisition cost as a single ratio.
Enter your LTV and CAC figures to see how they compare.
Enter your values
Estimated value one customer generates over their lifetime.
Cost to acquire one new customer. Must be greater than zero.
Results
LTV:CAC ratio
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Enter lifetime value and acquisition cost.
Customer lifetime value
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The LTV entered.
Customer acquisition cost
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The CAC entered.
Results are estimates based on the values entered and are provided for general planning.
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Step by step
How to use the LTV:CAC ratio
- Enter the Customer lifetime value.
- Enter the Customer acquisition cost for the same customer group or period.
- Read the LTV:CAC ratio — lifetime value per dollar of acquisition cost.
Method
How to calculate LTV:CAC ratio
The ratio divides the value a customer is expected to generate by what it cost to acquire them. Expressing it as a single number makes acquisition economics comparable across channels, segments, and time — provided both inputs were calculated the same way.
Formula
LTV:CAC ratio = Customer lifetime value ÷ Customer acquisition cost
Assumptions
- LTV and CAC are measured on the same basis — both revenue-based or both margin-based.
- Both figures describe comparable customer cohorts and time periods.
- CAC is greater than zero, because the ratio divides by it.
- The ratio inherits every assumption built into the LTV and CAC estimates you enter.
The division is calculated at full precision before display. The ratio displays two decimals against 1; currency displays two decimals.
How to interpret the result
An LTV:CAC ratio of 4:1 means the estimated customer lifetime value is four times the acquisition cost. What that implies for your business depends on context: a revenue-based LTV includes costs a margin-based LTV has already removed, so the same ratio can describe very different economics.
Worked example: ratio by channel
Customers are worth $1,200 in lifetime value. Paid search acquires them for $800 each, a 1.50 : 1 ratio. Referrals acquire them for $150, an 8.00 : 1 ratio. Across all channels at a $400 average CAC, the ratio is 3.00 : 1, which hides the weak paid channel.
When to use it: deciding where to shift budget
Calculate the ratio per channel before moving money. A very high ratio can mean a channel is underfunded; a low one means each customer barely repays its cost. The ratio does not show how long repayment takes, so check payback time separately when cash is tight.
How to interpret the ratio
Interpretation varies by industry, gross margin, cash flow, retention accuracy, payback period, and business model. A subscription business with 85% gross margins and a six-month payback reads a given ratio very differently from a physical-goods business with 30% margins and upfront inventory costs.
Published rules of thumb circulate widely, but they assume a particular definition of LTV and a particular cost structure. Rather than adopting a target number, check that the ratio is built from figures you can defend and track how it moves for your own cohorts.
LTV vs CAC
CAC is a known, already-spent amount. LTV is a forecast, built on assumptions about purchase frequency, retention, and lifespan that may not hold. The ratio therefore compares a hard number with an estimate.
Sensitivity-check the LTV side: recalculate the ratio with a shorter lifespan and a lower purchase frequency, and see whether the conclusion survives.
Relationship to customer economics
The ratio ignores timing entirely. Two businesses with the same 4:1 ratio differ materially if one recovers CAC in two months and the other in two years, because the slower one needs far more working capital to grow at the same rate.
Read the ratio alongside CAC payback period and retention curves rather than treating it as a standalone verdict.
Frequently asked questions
Which calculator do you need?
- Need the lifetime value input first? Calculate it with the LTV Calculator.
- Need the acquisition cost input? Calculate it with the CAC Calculator.
Keep calculating
Related calculators
Calculate the two inputs first: the LTV calculator estimates revenue-based lifetime value, and the CAC calculator turns acquisition spend into a cost per new customer.