LTV to CAC calculator
LTV:CAC is a unit-economics metric. It has no single agreed formula — state the inputs. Meaningless without both definitions stated.
LTV to CAC ratio
LTV:CAC = LTV ÷ CAC$
%
%
$
LTV : CAC
3.9 : 1
How it’s worked out
- 1LTV($400 × 78.0%) ÷ 2.00%$15,600
- 2CAC$480,000 ÷ 120$4,000
- 3LTV ÷ CAC$15,600 ÷ $4,0003.9
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
How to read it
LTV:CAC compares what a customer is worth with what it cost to acquire.
Below 1:1 every new customer destroys value; around 3:1 is the usual target.
Common mistakes
- Building LTV on revenue and CAC on fully loaded cost.
- Quoting the ratio with infinite LTV from zero churn.
Questions
- What is a good LTV:CAC ratio?
- 3:1 is the common benchmark. Much higher can mean the company is under-investing in growth.
- How does it relate to CAC payback?
- Payback measures how fast acquisition cost is recovered; LTV:CAC measures how many times over. Read them together.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- Customer lifetime value calculatorLTV is a unit-economics metric, calculated as (ARPA × Gross margin) ÷ Revenue churn rate, both in the same period unit.Calculator
- CAC calculatorCAC is a unit-economics metric, calculated as Sales & marketing spend ÷ new customers.Calculator
- Magic number calculatorMagic number is a unit-economics metric, calculated as Net new ARR in the quarter ÷ prior-quarter S&M (equivalently (Δ quarterly revenue × 4) ÷ prior-quarter S&M).Calculator
- LTV:CACLTV:CAC is a unit-economics metric. It has no single agreed formula — state the inputs.Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.