Free calculator
LTV to CAC calculator. What a customer is worth against what they cost.
Get your LTV:CAC ratio, build lifetime value from your order data, see how many months a customer takes to pay back what you spent winning them, or set the highest CAC your target ratio allows. Free, in any currency. We ask for a work email once, before the first result.
LTV:CAC = customer lifetime value ÷ customer acquisition cost
Your result
3.0 : 1
lifetime value for every 1 spent winning the customer
The maths
Use gross profit rather than revenue when you can. At a 33% margin, a ratio built on revenue looks three times healthier than the same customers built on gross profit.
Reading the number
Three things the ratio will not say on its own.
3 to 1 is a habit, not a law
The 3:1 target comes from subscription software, where gross margins are high. A brand on a 40% margin should check the ratio on gross profit: 3:1 on revenue is only 1.2:1 on gross profit, which is thin, and below a 33% margin it falls under 1:1.
Payback decides cash, the ratio decides value
A 4:1 ratio that takes 18 months to pay back can still drain cash while you grow. Read CAC payback next to the ratio, especially when growth is paid for out of revenue.
LTV is a forecast
Lifetime value counts orders that customers have not placed yet. Build it from groups of customers you have watched for a while, such as 12-month revenue per customer, rather than from a lifetime guess.
FAQ
LTV to CAC, answered.
What is the LTV to CAC ratio?
It compares what a customer is worth over their lifetime with what it cost to win them. LTV:CAC = customer lifetime value ÷ customer acquisition cost. An LTV of 2,880 and a CAC of 960 is a ratio of 3 to 1.
What is a good LTV to CAC ratio?
3 to 1 is the common target, mostly from subscription businesses. Below 1 to 1 you lose money on every customer. Far above 3 to 1 can mean you are spending too little on growth. Check the ratio on gross profit as well as revenue.
How do you calculate LTV?
A simple version: average order value × orders per customer over their lifetime × gross margin. For 480 per order, 6 orders and a 40% margin, gross-profit LTV is 1,152.
How do you calculate CAC?
Divide what you spent winning customers in a period by the number of new customers in that period. Paid CAC uses ad spend and customers from ads, which judges the ads. Blended CAC uses all sales and marketing spend and every new customer, which judges the business.
What is CAC payback period?
The number of months a new customer takes to earn back what it cost to win them. CAC payback = CAC ÷ monthly gross profit per customer. A CAC of 2,400 and 450 of gross profit a month pays back in about 5.3 months.
How do I improve my LTV to CAC ratio?
Move either side. Lower CAC with ads that convert better, or raise LTV with repeat purchases, bigger orders and fewer refunds. Creative is one of the biggest levers on CAC that you control.
Creative is one of the biggest levers on CAC.
Marxx tags every ad in your account by hook, angle, format and offer, and rolls spend and CPA up by those tags. You see which kinds of ads win customers cheapest, and the next round starts from them.