Business
LTV to CAC Calculator
Enter LTV and CAC to see the ratio and payback context.
Is acquisition profitable?
LTV:CAC shows whether customers return more value than they cost to win. A common rule of thumb is 3:1 or better, but the right ratio depends on payback speed, gross margin and how aggressive you can be on cash. This calculator divides lifetime value by acquisition cost so growth and finance teams share one ratio. Pair it with payback months — a healthy ratio can still strain cash if payback is slow. Build LTV with customer lifetime value and CAC with customer acquisition cost. Back-of-desk estimates only — not investment advice. Early-stage products without repeat data should treat LTV as a hypothesis with wide error bars. Raise CAC budgets only as cohorts prove retention. Gross-merchandise businesses must use contribution after refunds and payment fees, not GMV, or the ratio flatters growth. Finance and growth should share one written definition of LTV and CAC so weekly dashboards do not argue past each other.
Worked example
Average customer contributes £180 LTV after variable costs. Blended CAC is £55. LTV:CAC = 180 ÷ 55 ≈ 3.3:1. If payback is four months and you have cash runway, scaling ads is plausible; if payback is fourteen months on thin reserves, fix retention or creative before spending more. If LTV falls to £120 after a pricing change while CAC stays £55, the ratio drops to about 2.2:1 — pause scale and fix retention or pricing before buying more traffic.
Limits and assumptions
Simple LTV ignores churn curves and discounting. CAC should include tools and sales cost, not only media. Organic and paid mixes change blended CAC — segment when channels behave differently.
Frequently asked questions
What is a good LTV to CAC ratio?
Many SaaS and subscription teams aim near 3:1 or higher. Marketplaces and low-repeat retail may run tighter — judge with payback time.
Should CAC include salaries?
Include sales and marketing people if their work is mainly acquisition. Be consistent period to period.
How often should I recalculate?
Monthly is common while scaling. Recalculate after pricing, fee or creative changes.
What if LTV is uncertain for new products?
Use a conservative early LTV and raise CAC targets only as retention data arrives.
How does this relate to break-even ROAS?
ROAS is campaign revenue efficiency; LTV:CAC is customer-level economics. Use both — see break-even ROAS.