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LTV to CAC Ratio Calculator

Calculate and evaluate your Customer Lifetime Value to Customer Acquisition Cost ratio, a key metric for business sustainability.

LTV to CAC Ratio Calculator

$

Total gross profit you expect to earn from a customer over their lifetime

$

Average cost to acquire a new customer

Understanding LTV:CAC Ratio

LTV to CAC Ratio compares how much profit a customer generates over their lifetime with how much it costs to acquire them. It's a critical metric for evaluating business sustainability and growth potential.

Formula:

LTV to CAC Ratio = Lifetime Gross Profit / Customer Acquisition Cost

Interpretation:

  • Below 1:1 - Losing money on each customer
  • 1:1 to 3:1 - Marginally profitable, needs improvement
  • 3:1 to 5:1 - Healthy ratio, good business model
  • Above 5:1 - Excellent unit economics, may be under-investing in growth

Note: This calculation uses gross profit in the LTV. Some companies use revenue instead, which results in a higher ratio but doesn't account for the cost of providing your product/service.

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