CAC & LTV Ratio Calculator
Analyze your customer acquisition cost versus lifetime value to measure unit economics.
How the CAC & LTV Ratio Calculator Works
Customer acquisition cost (CAC) tells you what you pay to win a new customer. Customer lifetime value (LTV) tells you how much that customer is worth over time. Comparing the two shows whether your marketing can grow the business without burning cash.
Enter your total ad spend, the number of new customers it brought in, your average order value, and how many orders a typical customer places. The tool calculates CAC and LTV and divides one by the other. The result card turns green at 3:1 or better, blue between 1:1 and 3:1, and red below 1:1.
Key Formulas Behind This Tool
- Customer Acquisition Cost (CAC): Total Ad Spend / New Customers Acquired
- Customer Lifetime Value (LTV): Average Order Value x Average Orders per Customer
- LTV:CAC Ratio: LTV / CAC
- Ratio Health: 3:1 or higher is healthy, 1:1 to 3:1 is moderate, below 1:1 is unsustainable
Frequently Asked Questions (FAQ)
What is a good LTV to CAC ratio?
A ratio of 3:1 or higher is a common benchmark for healthy, scalable growth. Between 1:1 and 3:1 you may be profitable over time but have limited room to scale, and below 1:1 you lose money on every customer you acquire.
How do I calculate Customer Acquisition Cost (CAC)?
Divide your total ad spend by the number of new customers it brought in during the same period. For example, $5,000 in ad spend that produces 100 new customers gives a CAC of $50.
How is Customer Lifetime Value calculated here?
This tool uses a simple revenue-based estimate: Average Order Value multiplied by the average number of orders per customer. For a stricter view, use the profit per order instead of revenue as your order value.
My ratio is below 3:1. What should I do?
You can lower CAC with better creative and targeting, or raise LTV with upsells, bundles, subscriptions, and email or SMS flows that bring customers back for more orders.