Performance
What is LTV:CAC Ratio?
LTV to CAC Ratio
DEFINITION
LTV:CAC Ratio compares Lifetime Value to Customer Acquisition Cost. A 3:1 ratio is healthy — you earn $3 for every $1 spent acquiring customers.
FORMULA
LTV:CAC = Lifetime Value ÷ Customer Acquisition CostINDUSTRY BENCHMARKS
Under 1:1 unprofitable · 1-3:1 losing money or breakeven · 3-5:1 healthy · 5+:1 under-investing in growth
Why LTV:CAC Ratio matters
The single best health metric for any subscription or repeat-purchase business. Below 3:1, you cannot grow profitably. Above 5:1, you should spend MORE on acquisition — you are leaving growth on the table.
Common questions about LTV:CAC Ratio
What is LTV:CAC Ratio?▾
LTV:CAC Ratio compares Lifetime Value to Customer Acquisition Cost. A 3:1 ratio is healthy — you earn $3 for every $1 spent acquiring customers.
How is LTV:CAC Ratio calculated?▾
LTV:CAC = Lifetime Value ÷ Customer Acquisition Cost
What is a good LTV:CAC Ratio?▾
Under 1:1 unprofitable · 1-3:1 losing money or breakeven · 3-5:1 healthy · 5+:1 under-investing in growth
Need help applying LTV:CAC Ratio to your business?
Book a free 30-min call. We will audit your metrics, benchmark them against your industry, and flag what to fix first.
Book a free audit