Free tool
LTV:CAC Ratio Calculator
The single ratio that tells you if growth is profitable. Enter customer lifetime value and acquisition cost to see your LTV:CAC ratio, a clear health label, and what to do next.
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Result
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The LTV:CAC formula
LTV : CAC ratio = Customer lifetime value ÷ Customer acquisition costExample calculation
A customer is worth $576 in profit over their lifetime, and costs $120 to acquire. The ratio is 576 ÷ 120 = 4.8 : 1 — a healthy, profitable ratio.
What your ratio means
- Below 1:1: losing money on every customer.
- 1:1–2:1: weak.
- 2:1–3:1: acceptable.
- 3:1–5:1: healthy.
- 5:1+: possibly under-investing in growth.
Common mistakes
- Using gross LTV, which overstates how profitable acquisition is.
- Assuming higher is always better — very high can mean too cautious.
- Comparing your ratio to businesses with different margins or sales cycles.
The number tells you where you are. Not what to do next.
The ratio tells you whether to scale, fix, or hold — Cleverlio turns that into weekly actions.
Cleverlio decides what your business should do this week and writes the work — the posts, the messages, the website copy. You review it and publish it yourself.
See what Cleverlio would doCommon questions
What is the LTV:CAC ratio?
It compares the lifetime value of a customer to what it costs to acquire them. A 3:1 ratio means each customer is worth three times what you paid to win them.
What is a good LTV:CAC ratio?
Below 1:1 loses money, 1:1–2:1 is weak, 2:1–3:1 is acceptable, 3:1–5:1 is healthy, and above 5:1 may mean you are under-investing in growth.
Why is a very high LTV:CAC ratio not always good?
A ratio above 5:1 often signals you could grow faster by spending more on acquisition. You are being so cautious that you may be leaving customers and revenue on the table.
Should LTV use revenue or profit?
Use profit-based LTV. Using gross revenue inflates the ratio and can make unprofitable acquisition look healthy.
How do I improve my LTV:CAC ratio?
Either raise LTV (more repeat purchases, higher order value, better retention) or lower CAC (better conversion, cheaper channels, less wasted spend). Improving both compounds quickly.