What is LTV to CAC Ratio (LTV:CAC)?
Also known as: LTV/CAC, LTV to CAC
The LTV:CAC ratio compares the lifetime value of a customer to the cost of acquiring them, measuring the return on acquisition spend.
What is LTV:CAC?
This single ratio answers 'do our unit economics work?' Below 1:1 you lose money on every customer. Far above 5:1 can mean you're under-investing in growth and leaving the market to competitors.
How to calculate LTV:CAC
Worked example
LTV is $8,000 and CAC is $800. LTV:CAC = $8,000 ÷ $800 = 10:1.
What's a good LTV:CAC?
3:1 is the classic healthy benchmark. 1:1 or below is unsustainable; 5:1+ may signal under-investment in growth.
Frequently asked questions
What's a good LTV:CAC ratio?
Around 3:1 is the widely cited target — enough margin to be profitable while still investing aggressively in acquisition.
Can LTV:CAC be too high?
Yes. A very high ratio (e.g. 8:1+) often means you could profitably spend more to grow faster and are leaving market share on the table.