LTV:CAC Ratio Calculator

Compare lifetime value against acquisition cost and payback period.

About LTV:CAC Ratio Calculator

A ratio of three to one is the usual benchmark, and much higher ratios often signal underspending on growth rather than excellence. Payback period matters independently because it determines working capital needs. A high ratio with a long payback still consumes cash, which is why both figures are reported rather than either alone.

Formula

LTV:CAC Ratio

Ratio = lifetime value ÷ acquisition cost; payback = CAC ÷ monthly gross profit

target ratio: Three to one is the commonly cited benchmark
sales cycle: Time before revenue begins, which extends effective payback

Worked example

With the default values below, LTV:CAC Ratio Calculator returns LTV to CAC Ratio of 3.250. Change any input above and every figure here is recalculated in your browser.

Inputs used

Customer lifetime valueminimum 0: 2,600
Customer acquisition costminimum 0.01: 800
Monthly gross profit per customerminimum 0.01: 66
Sales cycle lengthminimum 0 months: 1.5 months

Results

LTV to CAC Ratio: 3.250 x
CAC Payback Period: 12.12 months
Payback Including the Sales Cycle: 13.62 months
Net Contribution per Customer: $1,800.00
Verdict: Healthy unit economics in the usual target range

Step by step

1Values used
2LTV:CAC Ratio
3LTV to CAC Ratio= 3.250 x
4CAC Payback Period= 12.12 months
5Payback Including the Sales Cycle= 13.62 months
6Net Contribution per Customer= 1,800.00
7Verdict= Healthy unit economics in the usual target range

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is LTV:CAC Ratio calculated?

Ratio = lifetime value ÷ acquisition cost; payback = CAC ÷ monthly gross profit A ratio of three to one is the usual benchmark, and much higher ratios often signal underspending on growth rather than excellence. Payback period matters independently because it determines working capital needs.

Why does LTV:CAC Ratio matter?

A high ratio with a long payback still consumes cash, which is why both figures are reported rather than either alone.

What values do I need to enter?

This calculator takes 4 inputs: Customer lifetime value, Customer acquisition cost, Monthly gross profit per customer, Sales cycle length. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.