About the LTV to CAC Ratio Calculator
The LTV:CAC ratio compares what a customer is worth with what it costs to acquire them. This LTV to CAC ratio calculator divides lifetime value (in gross profit) by customer acquisition cost. It also calculates CAC payback period: acquisition cost divided by gross profit per customer per month, showing how long before a new customer has paid back what you spent to win them.
The verdict reads the ratio against common rules of thumb: below 1 means you lose money on each customer, below 3 suggests growth may be expensive, and well above 5 can mean you are under-investing in growth. These are guides, not laws, and the right level depends on your cash flow. Your inputs remain in your browser.
How to use it
- Enter customer lifetime value based on gross profit.
- Enter customer acquisition cost.
- Add monthly gross profit per customer.
- Review the ratio, payback months and verdict.
Frequently asked questions
What is a good LTV to CAC ratio?
Around 3:1 is a commonly quoted rule of thumb, meaning a customer is worth three times what it costs to acquire. The right target depends on your margins, cash position and growth stage, so treat 3:1 as a starting point, not a rule.
What is CAC payback period?
It is the number of months a customer needs to generate enough gross profit to cover what it cost to acquire them. Shorter payback means cash comes back faster, which matters especially for businesses funding growth from revenue. Track it alongside LTV:CAC.
Can the LTV:CAC ratio be too high?
Yes. A very high ratio can mean you are being too cautious with acquisition spend and leaving profitable growth on the table. Test increasing spend while watching payback and the ratio. Increase budgets gradually and keep measuring, because CAC often rises as you reach less responsive audiences.