LTV vs CAC Ratio Calculator

About LTV:CAC Ratio

The LTV:CAC ratio compares the lifetime value of a customer against the cost to acquire them. This metric helps you:

  • Evaluate customer profitability
  • Assess marketing efficiency
  • Guide investment decisions
  • Optimize acquisition strategies

Formula

LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost

Interpreting Results

  • <1:1: Unsustainable business model
  • 1:1 - 3:1: Needs improvement
  • 3:1 - 5:1: Healthy ratio
  • >5:1: Potential for increased acquisition spend

Optimization Tips

  • Increase customer retention to improve LTV
  • Optimize marketing channels to reduce CAC
  • Focus on high-value customer segments
  • Monitor ratio trends over time