LTV:CAC
metricsLifetime Value to Customer Acquisition Cost Ratio
Definition
The ratio of customer lifetime value to customer acquisition cost. A key metric for business sustainability.
How to Calculate LTV:CAC
Customer Lifetime Value ÷ Customer Acquisition Cost
Example
Scenario: Customer LTV is $300 and CAC is $60
Calculation: $300 ÷ $60 = 5:1 LTV:CAC ratio
What's a Good LTV:CAC?
3:1 minimum for sustainability, 5:1+ for healthy growth
Common Mistakes
- Using theoretical LTV instead of actual cohort data
- Not accounting for gross margin in calculations
💡 Expert Tip
Track LTV:CAC by acquisition channel and customer segment. Different channels often have dramatically different unit economics.
— Based on $100M+ in managed ad spend
Related Terms
By Kristijan Arapov • Based on $100M+ in managed ad spend • Updated 2026