LTV:CAC Ratio Calculator
Measure the relationship between customer lifetime value and acquisition cost. The golden ratio for sustainable growth is 3:1 or higher.
Total profit from a customer over their lifetime
Calculate your LTVTotal cost to acquire one customer
Calculate your CACUnderstanding LTV:CAC Ratio
The LTV:CAC ratio is one of the most important metrics for measuring business health and growth sustainability. It compares the lifetime value of a customer to the cost of acquiring them, revealing whether your growth investments are paying off.
What is a Good LTV:CAC Ratio?
Below 1:1
Losing money on every customer. Unsustainable - requires immediate action.
1:1 to 2:1
Barely breaking even. Little room for error or investment in other areas.
3:1 (The Golden Ratio)
Ideal balance. Generating healthy returns while investing in growth.
5:1+
Excellent, but may indicate under-investment in growth opportunities.
Why 3:1 is the Target
The 3:1 ratio has become the gold standard because it allows for healthy margins after accounting for:
- Operational costs: Running your business, serving customers
- Reinvestment: Product development, team growth
- Buffer: Protection against market changes and churn fluctuations
- Profit: Returns for owners and investors
How to Improve Your LTV:CAC Ratio
Increase LTV:
- Reduce churn through better onboarding and customer success
- Increase average order value through upselling and cross-selling
- Improve product to increase usage and engagement
- Build loyalty programs to encourage repeat purchases
Decrease CAC:
- Optimize marketing channels and eliminate underperformers
- Improve conversion rates on landing pages and sales process
- Build referral programs for lower-cost acquisition
- Invest in content and SEO for organic growth
LTV:CAC by Business Model
- SaaS: Target 3:1 or higher. Subscription models benefit from predictable LTV.
- E-commerce: Often 2-4:1. Focus on repeat purchase rate and AOV.
- Marketplaces: Can be higher due to network effects reducing CAC over time.
- Enterprise Sales: Higher CAC acceptable due to larger deal sizes and longer retention.
Want to Improve Your LTV:CAC Ratio?
Our pay-per-meeting model delivers predictable CAC. You know exactly what you're paying for each qualified opportunity.
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