# LTV vs CAC Ratio Calculator

Customer Lifetime Value ($)

Customer Acquisition Cost ($)

Calculate

## About LTV:CAC Ratio

The LTV:CAC ratio compares the lifetime value of a customer against the cost to acquire them. This metric helps you:

- Evaluate customer profitability
- Assess marketing efficiency
- Guide investment decisions
- Optimize acquisition strategies

### Formula

LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost

### Interpreting Results

- <1:1: Unsustainable business model
- 1:1 - 3:1: Needs improvement
- 3:1 - 5:1: Healthy ratio
- >5:1: Potential for increased acquisition spend

### Optimization Tips

- Increase customer retention to improve LTV
- Optimize marketing channels to reduce CAC
- Focus on high-value customer segments
- Monitor ratio trends over time