LTV:CAC Ratio Calculator
LTV:CAC Ratio boils a company's growth engine down to one number: how much a customer is worth relative to what it cost to win them.
Order Economics
Retention
Acquisition
LTV : CAC Ratio
What This Means
LTV comes out to $136 and CAC to $100.00. A ratio of 3:1 or higher is a widely cited benchmark for healthy unit economics; below 1:1 means the business loses money on the average customer.
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The Formula
LTV:CAC Ratio = ((AOV − COGS − Shipping − Payment Fees) × Orders per Customer) / (Sales & Marketing Spend / New Customers Acquired)
Same underlying formula as Customer Lifetime Value divided by Customer Acquisition Cost, just built from raw order economics and acquisition spend instead of taking LTV and CAC as already-known numbers.
Why It Matters
This is one of the fastest sanity checks for whether growth spending is sustainable. A ratio below 1:1 means the business loses money on the average customer regardless of volume. Building both sides of the ratio from raw inputs, rather than plugging in pre-computed LTV and CAC, also shows immediately whether a weak ratio is a margin problem, a retention problem, or an acquisition-cost problem.
Example
A customer buys at a $60 AOV with $18 in COGS, $6 in shipping, and $2 in payment processing per order, averaging 4 lifetime orders, for an LTV of $136. Acquiring them costs $5,000 in sales and marketing spread across 50 new customers, a $100 CAC. The ratio is $136 divided by $100, or 1.4:1, thin, and a signal to raise margin, order frequency, or acquisition efficiency.
Frequently Asked Questions
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