LTV-to-CAC Ratio Calculator
The ratio of customer lifetime value (LTV) to customer acquisition cost (CAC) is one of the most important unit-economics metrics for any subscription or repeat-purchase business. It tells you whether the value a customer brings over their lifetime justifies what you spend to win them. Enter your LTV and CAC below to see the ratio, the profit per customer, and how your figure compares to the commonly cited 3:1 health benchmark.
LTV-to-CAC ratio formula
LTV:CAC ratio = LTV / CAC
Profit per customer = LTV - CAC
CAC as % of LTV = (CAC / LTV) * 100
vs. benchmark = ratio - target benchmark
A ratio of 3 means each customer returns three times what it costs to acquire them. The "vs. benchmark" output is positive when you exceed your target and negative when you fall short.
How to read your result
- Below 1: you lose money on every customer acquired. Acquisition is unsustainable.
- 1 to 3: the business is viable but acquisition efficiency or retention may need work.
- Around 3: the commonly cited healthy zone for sustainable, capital-efficient growth.
- Well above 3: profitable per customer, but you may be leaving growth on the table by underspending on acquisition.
LTV:CAC ratio: frequently asked questions
What is a good LTV:CAC ratio?
A widely cited rule of thumb among investors and operators is that a healthy LTV:CAC ratio is around 3:1. A ratio below 1 means you lose money on each customer. A ratio far above 3 (such as 5 or more) can signal underinvestment in growth, because you may be able to acquire more customers profitably. This calculator computes the raw ratio so you can compare it to your own targets.
How is lifetime value (LTV) calculated?
A common formula is LTV = (average revenue per customer per period times gross margin) divided by churn rate. Many teams use a simpler version: average gross profit per customer multiplied by the average number of periods a customer stays. Because LTV depends on your own retention and margin data, this calculator takes LTV as a user-editable input rather than assuming it.
What does CAC include?
Customer acquisition cost (CAC) is total sales and marketing spend over a period divided by the number of new customers acquired in that period. It should include salaries, ad spend, tools, and overhead attributable to acquisition. Enter your own computed CAC as an input.
Should I use LTV or gross-margin LTV?
Use gross-margin LTV (revenue lifetime value multiplied by gross margin percentage) for the most meaningful comparison to CAC, because CAC is a cost and should be measured against profit, not revenue. Comparing revenue LTV to CAC overstates the health of the business.
Sources and methodology
- The LTV:CAC ratio and the 3:1 benchmark are standard concepts in subscription business analysis. The ratio is a direct arithmetic definition (LTV divided by CAC); no external figure is hardcoded here.
- U.S. Small Business Administration: Manage your finances.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.