Comprehensive Guide
Learn more in our Business & Tax Guide.
How it works
cac to ltv calculator takes your inputs and produces ltv : cac ratio, cac, ltv. Customer acquisition cost versus lifetime value — the ratio that tells you whether the machine that makes customers is profitable. You provide 2 inputs: Customer acquisition cost (currency, in dollars) (default: 85 dollars); Customer lifetime value (currency, in dollars) (default: 380 dollars). The calculator returns 3 outputs: LTV : CAC ratio (the primary result); CAC (a supplementary figure); LTV (a supplementary figure). Business tax and finance calculations combine multiple moving parts — revenue, expenses, depreciation, tax brackets, and timing — in ways that make back-of-envelope estimates unreliable. This calculator handles the interaction of those variables precisely, so your business decisions rest on real arithmetic. The underlying formula: Ratio = LTV / CAC | 3+ healthy | 1-3 marginal | <1 unsustainable With the default values, ltv : cac ratio is computed from the interaction of every input field — change any one of them and the result updates immediately, so you can stress-test different scenarios without re-entering the whole form. Adjust the inputs to match your real financial situation. The defaults are realistic starting points, but every person's circumstances differ — your actual income, expenses, rates, and timelines will produce a different answer. Use the tool iteratively: start with the defaults, then change one variable at a time to see which factor has the largest impact on your outcome.Formula
Ratio = LTV / CAC | 3+ healthy | 1-3 marginal | <1 unsustainable
Tips
- Use gross margin in LTV, or the ratio overstates health by the margin's gap.
- Churn is the silent killer of LTV — a 2% monthly churn cuts a 60-month LTV roughly in half.
- Cohort the CAC: the blended number hides whether new channels are worsening.
- A ratio under 3 with fast growth is not yet a crisis — but it is a standing plan to fix it before funding runs out.
Frequently asked questions
What is a good LTV to CAC ratio?
3 is the classic benchmark: for every $1 of acquisition cost, the customer returns $3. Below 3 you may still be viable with high retention, but the margin for error shrinks; above 5 is often a signal you are underinvesting in growth.
How do I calculate customer lifetime value?
LTV = average gross profit per customer per period x average retention period. For subscriptions: monthly gross profit / monthly churn rate. Revenue-based LTV flatters the number — always work in gross profit.
Why is my CAC rising?
As channels saturate, acquisition costs rise; as you spend more, efficiency falls; and new markets are costlier. Rising CAC with stable LTV compresses the ratio — the engine's trend line is the early warning before cash flow feels it.
What if my ratio is below 1?
Every customer loses money — fix the model before scaling: raise price, cut acquisition waste, improve retention, or increase repeat purchase. Scaling a sub-1 ratio just scales the burn. Work from the engine's ratio back to which input to move.