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Unit economics

LTV to CAC Ratio Calculator

One ratio that says whether your growth engine builds value or quietly burns it.

LTV:CAC ratio = customer lifetime value ÷ customer acquisition cost. A customer worth $192 of lifetime margin who costs $48 to acquire gives a ratio of 4.0 — acquisition consumes 25% of everything that customer will contribute, leaving 75% for overhead and profit. The common health bar is 3:1; below that, each new customer leaves too little behind, and below 1:1 you are paying more for customers than they will ever return. Enter both numbers to get the ratio and the acquisition share.

LTV to CAC Ratio Calculator — your numbers

LTV : CAC ratio

4

LTV consumed by acquisition

25.0%

Estimate only. Results reflect exactly the numbers you enter — verify against your own accounting before making pricing decisions.

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Worked examples

Healthy 4:1 economics

Customer lifetime value $192.00
Customer acquisition cost $48.00
LTV : CAC ratio 4
LTV consumed by acquisition 25.0%

Acquisition takes a quarter of lifetime value — comfortable room to grow.

Borderline 1.6:1 ratio

Customer lifetime value $120.00
Customer acquisition cost $75.00
LTV : CAC ratio 1.60
LTV consumed by acquisition 62.5%

Acquisition eats 62.5% of LTV — overhead and returns will take the rest.

Frequently asked questions

What LTV to CAC ratio should I aim for?

The standard benchmark is at least 3:1, using margin-based LTV. That leaves roughly two-thirds of lifetime contribution for fulfillment overhead, returns, fixed costs and profit. Ratios between 1:1 and 2:1 mean you grow but keep almost nothing; a very high ratio like 6:1 or more often signals you could profitably spend more on acquisition and grow faster.

Why does the ratio look fine but cash keeps shrinking?

Because LTV arrives over years while CAC is paid today. A 4:1 ratio with a two-year lifetime still means fronting $48 now to collect $192 slowly. Fast-growing stores can be profitable on paper and cash-starved in practice. Pair this ratio with a CAC payback calculation — months to recover CAC — to see the cash-flow side of the same economics.

Should LTV in this ratio be revenue or margin?

Margin. A ratio built on lifetime revenue overstates health dramatically: $480 revenue ÷ $48 CAC looks like a spectacular 10:1, but at 40% margin the true ratio is 4:1. Investors and operators who quote the 3:1 benchmark mean gross-margin LTV. If you only have revenue LTV, multiply it by gross margin before entering it here.

How often should I recalculate the ratio?

Monthly, and separately per acquisition channel. A blended 3.5:1 can hide a 6:1 ratio on email and search sitting next to a 1.2:1 on prospecting ads — averaging them hides where money is being lost. Channel-level ratios tell you where to shift the next dollar of budget; the blended number only tells you whether the whole machine is working.

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Part of the Unit Economics collection.