LTV:CAC Ratio Calculator

LTV:CAC directly compares customer lifetime value against acquisition cost. Divide LTV by CAC. Above 3 is healthy; above 5 is excellent; below 1 the business loses money per customer. Unlike the SaaS-specific version, this general tool works for any business with calculable LTV and CAC - retail, services, ecommerce, subscription.

1,500 LTV against 500 CAC = 3.0x ratio. Solid. Every pound of acquisition cost returns 3 of lifetime value over the customer's tenure. Profit per customer is 1,000. Healthy unit economics - scaling acquisition at current CAC level creates value, so long as the ratio holds as volume grows (it usually compresses as you move beyond best channels).

The ratio moves as the business matures. Early-stage often runs 1-2x as best channels are tested. Mature businesses target 3-5x. Above 5x usually means under-investment in growth - you could spend more on acquisition and still earn positive return. Above 10x signals either monopoly economics or massive under-investment.

Run it with sensible defaults

Using customer lifetime value of 1,500, customer acquisition cost of 500, the calculation works out to 3.00x. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC) — do not pull with equal force. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

How the math works

LTV:CAC = LTV ÷ CAC. Expressed as multiple (e.g., 3.0x).

Using this as a check-in

Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.