LTV to CAC ratio calculator
The ratio answers one question: does a customer bring back more than it cost to win them, and by how many times?
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How to use it
- Enter customer lifetime value (ltv) and customer acquisition cost (cac).
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Ratio = LTV ÷ CAC. Net value per customer = LTV − CAC.
Example
Inputs: Customer lifetime value (LTV) = 900, Customer acquisition cost (CAC) = 300. Result: LTV:CAC ratio: 3 x; Reading: Between 3 and 5: meets the common rule of thumb; Net value per customer: 600.00.
Limits and caveats
- The 3:1 rule is a common industry habit, not a formal standard.
- The ratio does not show when you earn the CAC back, so check the payback period too.
Questions about this tool
Why 3:1?
It is a rule of thumb from subscription businesses: every amount spent on acquisition returns three times as much, leaving room for running costs and profit.
Is a very high ratio always good?
Not always. It can mean you underspend on marketing and leave growth to competitors.
Should LTV be revenue or profit?
Gross profit is more accurate. Comparing revenue with CAC inflates the ratio.