Free LTV/CAC Ratio Calculator
Calculate the lifetime value to customer acquisition cost ratio to assess the return on investment for acquiring new customers.
LTV:CAC Ratio
3.75
LTV:CAC Ratio vs Customer Lifetime Value (LTV)
How to Calculate the LTV:CAC Ratio
Formula
LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost
This single number distills the economics of your customer base. A ratio of 3:1 or higher generally indicates a healthy, scalable business model. Below 1:1 means you spend more acquiring customers than they are worth. Very high ratios (above 5:1) may suggest you are under-investing in growth and leaving market share on the table.
Example Calculation
A SaaS company estimates customer LTV at $1,500 and spends $400 to acquire each customer.
- 01LTV:CAC = $1,500 / $400 = 3.75
- 02Net Value Per Customer = $1,500 - $400 = $1,100
- 03Customer ROI = ($1,100 / $400) x 100 = 275%
Frequently Asked Questions
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