Free tool
LTV:CAC calculator
Calculate the ratio of customer lifetime value to acquisition cost. Enter your LTV and CAC directly, or build them up from ARPU, gross margin, churn, spend, and new customers. See the ratio and a verdict against the 3:1 benchmark instantly.
Enter your customer lifetime value and acquisition cost directly.
LTV:CAC ratio
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Enter values to calculate
LTV:CAC = lifetime value ÷ acquisition cost. A 3:1 ratio is the widely cited healthy benchmark — $3 in lifetime value for every $1 spent acquiring a customer. Below 1:1 means you lose money on every customer you acquire.
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FAQ
LTV:CAC calculator FAQ
What is the LTV:CAC ratio?
The LTV:CAC ratio compares customer lifetime value (LTV) to customer acquisition cost (CAC). It shows how much value each customer generates relative to what it costs to acquire them. A 3:1 ratio means every $1 spent on acquisition returns $3 in lifetime value.
What is a good LTV:CAC ratio?
A 3:1 ratio is the widely cited healthy benchmark — $3 in lifetime value for every $1 of acquisition cost. Below 1:1 means you are losing money on every customer. Above 5:1 may mean you are under-investing in growth and could scale acquisition faster.
How do you calculate LTV?
LTV = (average revenue per user × gross margin) ÷ churn rate. For example, $50 ARPU at 80% margin with 5% monthly churn gives an LTV of ($50 × 0.80) ÷ 0.05 = $800. A simpler formula multiplies average purchase value by purchase frequency and customer lifespan.
How do you calculate CAC?
CAC = total sales and marketing spend ÷ number of new customers acquired. For example, $10,000 in spend that brought in 50 new customers gives a CAC of $200.
What does a 1:1 LTV:CAC ratio mean?
A 1:1 ratio means you spend exactly as much to acquire a customer as they are worth over their entire lifetime. This is unsustainable — it ignores operating costs, salaries, and infrastructure, so you would lose money overall.
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