LTV:CAC Ratio Calculator
Ratio analysis and business health scoring.
LTV:CAC measures customer value vs acquisition cost. Ratio of 3:1 or higher is healthy; below 1:1 means you lose money on each customer. Payback period (CAC / monthly contribution) is also important—aim for under 12 months. This calculator helps you assess unit economics.
Inputs
Results
LTV:CAC ratio: 4.0
Payback (months): 3.75
Health: Healthy
Insights
Formula
LTV:CAC = LTV / CAC Payback = CAC / Monthly contribution
Input Definitions
What does each input mean?
- LTV
- Customer lifetime value—total revenue from a customer over their relationship. Use CLV calculator for estimate.
- CAC
- Customer acquisition cost—what you spend to acquire one customer. Use CAC calculator for estimate.
- Monthly contribution
- Profit per customer per month (revenue minus variable costs). Used to compute payback period.
Related Calculators
The Ratio That Tells You If Your Business Is Actually Scalable
LTV:CAC is the single most useful ratio for understanding whether a business model can scale profitably. A ratio below 1:1 means you’re losing money on every customer you acquire. Between 1:1 and 3:1 is marginal. Above 3:1 is generally considered healthy. Above 5:1 often means you’re underinvesting in growth. This calculator helps you see where you stand and how small changes shift the picture.
It’s most useful for subscription businesses, SaaS companies, and any business where customers buy repeatedly over time. Run this before fundraising conversations, when evaluating whether to increase your acquisition budget, or when you want to understand the financial leverage in improving retention versus reducing CAC. The ratio is directionally simple — but modeling it with real numbers reveals a lot.