What is LTV:CAC Ratio?

LTV:CAC Ratio is a metric that compares the Customer Lifetime Value (LTV) to the Customer Acquisition Cost (CAC). It measures the efficiency of your marketing spend and the long-term profitability of your customer base.

How do you calculate LTV:CAC?

The ratio is calculated by dividing the Lifetime Value of a customer by the cost to acquire them. Formula: LTV / CAC.

What is a good LTV:CAC ratio?

A healthy ratio for a growing business is typically 3:1. A 1:1 ratio means you are just breaking even on customers, while a 5:1 ratio might indicate you are underspending on growth.

Why is LTV:CAC important for D2C brands?

For D2C brands, LTV:CAC is critical for understanding if acquisition costs are sustainable relative to the profit a customer generates over time. It helps in deciding how much to scale ad spend.

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LTV:CAC Ratio Calculator

Determine the sustainability of your business model. The LTV:CAC ratio measures the relationship between the lifetime value of a customer and the cost to acquire them.

⚖️ LTV:CAC Ratio Calculator

Calculate the "Golden Metric" of unit economics and test sensitivity to cost changes.