Free tools / LTV to CAC calculator
Free toolLTV to CAC calculator
The single number that says whether your growth builds the business or drains it. How much is a customer worth, against how much you paid to get them?
Your numbers
Nothing you type here is stored.
Your ratio will appear here
Enter what a customer is worth and what they cost, then press Calculate.
General startup benchmark guidance, not a rule. What matters more is whether you can fund the wait.
What would move the ratio
A good ratio can still hide a cash problem. Check how long you wait to get paid back with the CAC payback calculator.
How this works
The formula
Ratio = lifetime value ÷ acquisition cost
A customer worth 600,000 who cost 100,000 to win gives a ratio of 6. Read it as six units of value for every one spent. Below 1 you are paying more for customers than they are worth.
What the benchmarks are worth
Around 3x is widely cited as healthy and it is a reasonable starting point, but it is a convention rather than a law. A business with a 2x ratio and fast payback can be far safer than one with 5x and a two-year wait.
What this does and does not tell you
- It inherits every assumption in your LTV, which is itself an estimate. A confident ratio built on a guessed churn rate is still a guess.
- It says nothing about timing. Value arriving over three years and cost paid today is a cash flow problem this ratio cannot see.
- A very high ratio is not automatically good. It often means you could profitably spend more on growth and are not.
- It is an average. If one customer segment is wildly profitable and another loses money, the blend hides both.
Questions people ask
Around 3x is the figure most commonly quoted, meaning a customer is worth roughly three times what you paid to acquire them. Treat that as general guidance rather than a target you have failed to hit. Early businesses often sit below it while they learn, and mature ones sometimes sit far above it because they are underinvesting in growth. The number matters most as a trend over time.
Not necessarily. A ratio of 10x usually means you could spend considerably more on acquisition and still make money on every customer. If a competitor is willing to spend more than you to win the same customers, they will take the market while your ratio looks excellent on a spreadsheet. High ratios are often a sign of caution rather than efficiency.
Easily, and this is the most important thing to understand about the metric. You pay acquisition costs today and collect lifetime value over months or years. A 5x ratio with a two-year payback still means two years of funding the gap from your own cash. That is why the payback calculator sits next to this one.
Yes. Money spent on campaigns that won nothing is still money spent acquiring customers. Excluding it produces a flattering CAC and therefore a flattering ratio. The honest test is total sales and marketing spend divided by customers actually won.
A ratio is a signal, not a strategy.
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