LTV to CAC Ratio Calculator

How to use this calculator

1. Enter the average lifetime value per customer.
2. Enter the all-in cost to acquire a customer.
3. See the LTV:CAC ratio to judge marketing efficiency.

Inputs explained

LTV

Total gross profit or contribution margin over a customer’s lifetime.

CAC

All-in acquisition cost: ads, sales, onboarding, incentives.

When to use it

• Checking if LTV:CAC meets the common ≥3:1 benchmark.
• Comparing channel efficiency when CAC differs but LTV is similar.
• Modeling pricing, margin, or churn changes on unit economics.

Tips & cautions

• Use gross profit LTV (not revenue) for a realistic ratio.
• Pair with CAC payback to see speed of recovery; a good ratio with slow payback can still strain cash.
• Refresh LTV regularly; churn changes can move the ratio quickly.
• Single-point snapshot; does not model churn curves or cohort decay.
• Ignores cash timing; combine with CAC payback for a fuller picture.
• Assumes LTV and CAC are measured over the same segments and periods.

Worked examples

Deep dive

FAQs

What is a good LTV:CAC ratio?

Many SaaS benchmarks target ≥3:1. Higher is better, but watch payback speed and churn.

Should I use revenue or gross profit for LTV?

Use gross profit to avoid overstating the ratio when COGS is material.

How often should I update LTV?

Update as churn, pricing, or expansion patterns change—quarterly is common.

Does this include overhead?

LTV is usually contribution margin after direct costs; overhead is handled separately.

Can I compare different segments?

Yes. Calculate LTV:CAC per segment or channel to spot where acquisition is efficient or weak.

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