LTV:CAC Ratio Calculator
Unit economics health.
Calculate LTV-to-CAC ratio from customer lifetime value and customer acquisition cost — the standard SaaS unit-economics health check.
What this tool does
This calculator computes the ratio between customer lifetime value and customer acquisition cost, a standard metric for assessing unit economics across subscription, retail, services, and ecommerce businesses. It takes your estimated lifetime value per customer and the cost to acquire that customer, then divides one by the other to produce a multiple. The result shows how many times over a customer's total revenue covers the cost to bring them in. A ratio of 3 or higher suggests stronger unit economics; from 1 up to 3 indicates moderate efficiency; below 1 suggests acquisition costs exceed customer value. The calculation assumes stable retention and revenue patterns and does not account for payback period, cash flow timing, or changes in acquisition or retention costs over time. The output is for modelling purposes and illustrates relative unit economics health based on your inputs.
Quick answer: with the default values, the result is 3.00x (LTV:CAC Ratio). Adjust the values below for your own figures.
Enter Values
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
LTV:CAC directly compares customer lifetime value against acquisition cost. Divide LTV by CAC. 3 or above is healthy; 5 or above 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 — the ratio implies room to spend more on acquisition while still earning a 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-running roughly every three months shows the trend rather than a single snapshot. One reading shows where things stand; several over time show whether they are improving. The trend matters more than any individual reading.
What this doesn't capture
The result reflects only the inputs you provide and the assumptions built into the formula. It is a simplified model rather than a complete picture, and factors specific to your situation may matter just as much.
£1,500 LTV ÷ £500 CAC = 3.00x.
Inputs
| LTV | $1,500.00 |
|---|---|
| CAC | $500.00 |
| Profit per Customer | $1,000.00 |
| Quality | Healthy |
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator computes the LTV:CAC ratio by dividing Customer Lifetime Value by Customer Acquisition Cost. The result is expressed as a multiple, indicating how many times over a customer's lifetime revenue covers the cost to acquire them. The calculation treats both inputs as fixed point values and does not adjust for time, discount rates, or the sequence in which cash flows occur. The model assumes Customer Lifetime Value reflects the total profit or revenue attributable to a customer over their entire relationship, and Customer Acquisition Cost includes all direct and indirect spending to bring that customer on board. The calculator does not account for churn timing, retention curves, operational overhead, refunds, variable costs by cohort, or changes in acquisition or retention efficiency over time. It serves as a static snapshot of unit economics health at a given moment.
References
Frequently Asked Questions
Is above 5x better?
LTV gross or net?
Include referrals?
Does CAC include all salaries?
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