LTV:CAC Ratio Calculator

The LTV-to-CAC ratio is the definitive test of whether a subscription business's unit economics work, and this calculator gives you the verdict instantly. It compares two numbers you already track: the lifetime value of a customer, the gross profit they generate over their whole relationship with you, and the cost of acquiring them. Dividing the first by the second tells you how many dollars of value each dollar of acquisition spend buys. The widely cited benchmark is three to one: if every dollar spent winning a customer returns at least three dollars of lifetime value, the business is generally healthy and can scale profitably. A ratio below one means you are losing money on every customer, a clearly broken model. A ratio that is very high, say above five, can actually signal under-investment in growth, that you could afford to spend more to acquire customers faster. This calculator makes the comparison clear. You enter your customer lifetime value and your customer acquisition cost, and it returns the ratio, your two inputs, and a verdict against the benchmark. The results update as you type. Use it to judge your unit economics, to decide whether to spend more or less on acquisition, or to prepare metrics for investors, who almost always ask for this ratio. A few points to keep it honest: use a lifetime value based on gross profit rather than revenue, and a fully loaded acquisition cost that includes all sales and marketing costs, so both sides of the ratio are realistic. Read the ratio alongside the CAC payback period too, since a strong ratio earned only over a very long payback can still strain cash flow. The sweet spot for most SaaS businesses is a ratio of three to five.

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6.4 : 1
LTV to CAC ratio
LTV$3,200
CAC$500
VerdictCould invest more

LTV:CAC = lifetime value / acquisition cost. 3:1 or higher is the healthy benchmark; below 1 loses money; very high can signal under-investment in growth.

How it works

The ratio divides customer lifetime value by customer acquisition cost. A result of three or more means each dollar spent acquiring a customer returns at least three dollars of lifetime gross profit, the common health benchmark. Below one means the business loses money on each customer, while a very high ratio may indicate room to invest more in growth.

Worked example

With a customer lifetime value of $3,200 and an acquisition cost of $500, the LTV-to-CAC ratio is $3,200 divided by $500, which is 6.4 to 1. That comfortably clears the 3 to 1 benchmark, suggesting strong unit economics, and may even indicate the business could spend more to acquire customers faster.

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Frequently asked questions

What is a good LTV:CAC ratio?

Three to one or higher is the widely used benchmark for healthy SaaS unit economics, meaning each dollar of acquisition spend returns at least three dollars of lifetime value. A ratio of three to five is often considered the sweet spot.

What does a ratio below 1 mean?

It means a customer's lifetime value is less than what it cost to acquire them, so the business loses money on every customer. That is an unsustainable model that needs either lower acquisition costs, higher retention, or more revenue per customer.

Can the ratio be too high?

Yes. A very high ratio, above five or so, can signal that you are under-investing in growth and could afford to spend more on acquisition to grow faster. It is worth reading alongside the CAC payback period and your growth rate.