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LTV:CAC Ratio Calculator
Work out your CAC, lifetime value, LTV:CAC ratio and payback period, in your own currency, and get a clear verdict on whether your unit economics are healthy.
Your unit economics
Updates as you type.
Lifetime value vs acquisition cost
A healthy business earns back several times what it spends to acquire a customer. The rule of thumb is a 3:1 ratio or better, with CAC paid back inside about 12 months.
This tool gives directional estimates from the assumptions you enter. Real unit economics vary with cohort behaviour, expansion revenue and channel mix.
Bend your unit economics with owned channels
Paid CAC is permanent; SEO and AEO lower acquisition cost as they compound. We build the organic and AI-search pipeline that improves this ratio over time. Free strategy call.
How the LTV:CAC calculator works
Your LTV:CAC ratio is the single clearest read on whether your growth is sustainable: how much a customer is worth over their lifetime compared with what it costs to acquire them. This tool derives every figure from inputs you already know.
CAC = monthly sales and marketing spend ÷ new customers per month. Average lifespan = 1 ÷ monthly churn rate. LTV = average monthly revenue per customer × gross margin × lifespan. Ratio = LTV ÷ CAC. CAC payback = CAC ÷ (monthly revenue per customer × gross margin), the months to earn back acquisition cost.
Why margin belongs in LTV
Lifetime value should be measured in gross profit, not revenue, because a customer is only worth what is left after the cost of serving them. Using revenue alone flatters the number and hides businesses that are busy but not profitable. Feeding gross margin into LTV is what makes the ratio an honest guide to how much you can afford to spend acquiring the next customer.
What a good ratio looks like
The widely used benchmark is roughly 3:1: three units of lifetime value for every unit of acquisition cost. Below 1:1 you lose money on every customer. Between 1 and 3 the model is marginal and usually needs better retention or cheaper acquisition. Comfortably above 3:1 with CAC paid back inside about a year is healthy, and a ratio far above 5:1 can even signal you are underinvesting in growth and leaving pipeline on the table.
Where SEO and AEO change the maths
Acquisition channels are not equal on CAC. Paid media stops the moment you stop paying, so its CAC is permanent, whereas organic channels like SEO and AEO have high upfront effort but a CAC that falls over time as the same content keeps compounding traffic and citations. Shifting acquisition toward owned channels is one of the most reliable ways to bend this ratio in your favour, which is what our SEO and AEO programmes are built to do.
Frequently asked questions
What is a good LTV:CAC ratio?
The common benchmark is about 3:1, three units of lifetime value for every unit of acquisition cost. Below 1:1 you lose money per customer; 1 to 3 is marginal; comfortably above 3 with CAC paid back inside roughly a year is healthy. A ratio far above 5:1 can mean you are underinvesting in growth.
Can I use it in my own currency?
Yes. Choose your country and CAC, LTV and the comparison are formatted in your currency, from US dollars and Indian rupees to pounds, euros and more, with correct local number grouping. Enter your spend and revenue in your own money and the outputs follow.
Should LTV use revenue or gross profit?
Gross profit. A customer is only worth what remains after the direct cost of serving them, so this calculator multiplies revenue by your gross margin before computing lifetime value. Using raw revenue overstates LTV and can make unprofitable growth look healthy.
What is CAC payback period?
It is the number of months of gross profit from a customer needed to recover what you spent to acquire them. Most efficient businesses aim to pay CAC back within about twelve months; a longer payback ties up cash and makes growth harder to fund, even when the long-run ratio looks fine.
How do I improve my LTV:CAC ratio?
Either raise LTV, through better retention, higher margins or expansion revenue, or lower CAC, through more efficient channels. Because churn drives lifespan, small retention gains move LTV a lot. On the CAC side, shifting acquisition toward compounding owned channels like SEO and AEO lowers cost over time in a way paid media never does.