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.

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.