The LTV:CAC ratio compresses the whole economics of a store into one comparison: what a customer is worth over their life, divided by what it cost to win them. This calculator takes the two numbers — lifetime value and acquisition cost, typed in directly or brought over from the LTV and CAC calculators linked below — and returns the ratio, CAC as a share of LTV, and, if you add the monthly gross profit per customer, the payback period that tells you how long your cash is underwater on each new customer.
¿Trabajas en español? La calculadora en español del CAC incluye el ratio LTV:CAC en la misma página: Calcular Costo de Adquisición de Cliente CAC.
The formula and the honest inputs
Ratio = LTV ÷ CAC. The formula is trivial; the inputs are where honesty lives. Use profit LTV (after gross margin) and a fully loaded CAC (ads plus tools plus acquisition salaries), over the same period and the same customer definition. Mixing revenue LTV with ad-only CAC manufactures ratios of 8:1 for businesses that are, in cash terms, losing money on every order.
Worked example
LTV $540 against CAC $135: ratio = 540 ÷ 135 = 4.0 : 1, CAC is 25% of LTV, and at $15 of monthly gross profit per customer the payback is 135 ÷ 15 = 9 months. Now the uncomfortable version: if that $540 was a revenue LTV at a 30% margin, the profit LTV is $162, the true ratio is 1.2:1 and the same business is fragile, not healthy. The calculator cannot tell which LTV you typed — that discipline is yours.
Reading the bands
The commonly quoted interpretation bands — repeated in e-commerce and SaaS practice for years — are: under 1:1 you lose money on every customer; 1–2:1 is tight and leaves little room for fees and surprises; 2–3:1 is workable, especially with quick payback; 3–5:1 is the classic healthy zone; over 5:1 may mean you are under-investing in growth. Treat them as rules of thumb, not laws: they ignore payback speed, cash position and how reliable the LTV estimate is. A 2.5:1 ratio paid back in six weeks is a safer business than a 4:1 ratio paid back in two years.
What moves the ratio
Four levers, in the order they usually pay off: raise retention or purchase frequency (multiplies LTV), raise margin or price (raises profit LTV), cut wasted ad spend (lowers CAC), and improve conversion (lowers CAC without touching the ad budget). Recompute the ratio per channel before acting on the blended figure — a store-wide 3:1 routinely hides one channel at 6:1 subsidising another at 0.8:1.
The ratio per channel tells the truth the blend hides
Suppose your store blends to LTV $300 and CAC $100 — a textbook 3:1. Split it: returning-customer campaigns run at CAC $25 against the same LTV (12:1, wonderful and unscalable), prospecting ads run at CAC $210 (1.4:1, quietly losing money after fees). The blend said “healthy”; the split says your growth engine loses money and your retention engine is carrying it. Neither number is the lie — the lie is acting on the average. This is also why a ratio slightly under the classic benchmark can be the right target: a subscription billed annually up front collects its LTV before the CAC payback clock matters, while a store paying 30-day ad invoices against a 9-month payback can be profitable on paper and insolvent in the bank. The ratio starts the conversation; payback and cash finish it.
Recompute it monthly, per channel where you can, and always with the same definitions of LTV and CAC — a ratio that changes because the bookkeeping changed teaches you nothing, while one that moves because the business moved is an early-warning system.
Related tools
Versión en español: Calcular Costo de Adquisición de Cliente CAC — Con ratio LTV:CAC incluido · LTV Calculator · CAC Calculator.
Embed this tool on your website — free
Copy the code below to add this working tool to your own page. A small credit link stays with it — that’s all we ask.