LTV/CAC Ratio Calculator Formula

Understand the math behind the ltv/cac ratio calculator. Each variable explained with a worked example.

Use the LTV/CAC Ratio Calculator

Formulas Used

LTV:CAC Ratio

ltv_cac_ratio = cac > 0 ? ltv / cac : 0

Net Value Per Customer

net_value_per_customer = ltv - cac

Customer ROI

roi_pct = cac > 0 ? ((ltv - cac) / cac) * 100 : 0

Variables

VariableDescriptionDefault
ltvCustomer Lifetime Value (LTV)(USD)1500
cacCustomer Acquisition Cost (CAC)(USD)400

How It Works

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.

Worked Example

A SaaS company estimates customer LTV at $1,500 and spends $400 to acquire each customer.

ltv = 1500cac = 400
  1. 01LTV:CAC = $1,500 / $400 = 3.75
  2. 02Net Value Per Customer = $1,500 - $400 = $1,100
  3. 03Customer ROI = ($1,100 / $400) x 100 = 275%

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