Compare lifetime value against acquisition cost and payback period.
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.
LTV:CAC Ratio
Ratio = lifetime value ÷ acquisition cost; payback = CAC ÷ monthly gross profit
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.
A high ratio with a long payback still consumes cash, which is why both figures are reported rather than either alone.
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.