LTV:CAC Ratio Calculator
Get the unit-economics verdict — your LTV:CAC ratio plus how many months it takes to earn back each customer you buy.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator renders the unit-economics verdict: the LTV:CAC ratio — how many dollars of lifetime contribution each dollar of acquisition spend buys — and CAC payback, the months of per-customer contribution it takes to earn the acquisition cost back. The two together matter more than either alone, because a healthy-looking ratio with a slow payback still strains cash: you front the CAC today and collect the LTV over years.
The formulas
- LTV:CAC ratio
- contribution LTV ÷ fully-loaded CACUse CONTRIBUTION LTV (after product costs) and fully-loaded CAC (ads + people + tools) — the flattering versions of both inputs make the ratio meaningless.
- CAC payback
- CAC ÷ monthly contribution per customer, in months
- Combined verdict
- ratio verdict, downgraded to caution when payback exceeds 12 monthsCash reality beats spreadsheet LTV — a good ratio collected too slowly still forces you to finance growth.
Worked example
- Say your contribution LTV is $900, your fully-loaded CAC is $250, and each customer contributes $35 per month after product costs.
- LTV:CAC = $900 ÷ $250 = 3.6:1 — above the 3:1 healthy benchmark (a widely-cited convention, not a law).
- CAC payback = $250 ÷ $35 = 7.1 months — inside the 6–12 month "ok" band (SMB rule of thumb).
- Combined verdict: good. If the monthly contribution were $15 instead, payback would stretch to 16.7 months and the tool would downgrade the same 3.6:1 ratio to caution, because you would be fronting acquisition cash for well over a year per customer.
Rates, benchmarks & sources
- LTV:CAC of 3:1 as the healthy benchmark, with above 5:1 flagged as possibly under-investing in growth — widely cited, not authoritative — Industry convention (labeled as such in BENCHMARKS)
- CAC payback bands: under 6 months good, 6–12 months ok, over 12 months a cash-flow strain — SMB rule of thumb
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- The verdict inherits every weakness of its inputs: an optimistic LTV projection or an understated ad-only CAC produces a confident-looking ratio that is simply wrong.
- The 3:1 benchmark is a convention popularized in SaaS — capital-light businesses with instant payback can thrive below it, and capital-intensive ones may need more; it is not a lender or investor requirement.
- Compares lifetime value collected over years against cash spent today with no discounting.
- A blended ratio can hide channel differences — one channel at 6:1 and another at 1:1 average out to a number that describes neither.
- Payback assumes the monthly contribution per customer is steady from month one; onboarding costs or ramp-up periods push real payback later.
Frequently asked questions
Is a 3:1 LTV:CAC ratio really the target?
Treat 3:1 as a widely-cited convention, not a law. Below 1:1 you demonstrably lose money on every customer; between 1 and 3 the economics work only while capital is cheap; around 3–5 is conventionally healthy; and far above 5 may mean you are under-investing in growth — you could profitably buy more customers than you are. Where your business should sit depends on payback speed and access to capital.
Why does CAC payback matter if my ratio is already good?
Because the ratio ignores timing. A $900 LTV on a $250 CAC is 3.6:1 whether the contribution arrives in 7 months or 25 — but your bank account cares enormously. Every new customer means fronting $250 today; if payback takes 17 months, growth consumes cash for well over a year before returning it. That is why this tool downgrades a good ratio to caution when payback exceeds 12 months.
Which LTV and CAC numbers should I plug in?
Contribution LTV (after product costs) from the LTV tool, and fully-loaded CAC (ad spend plus allocated salaries plus tools) from the CAC tool. Using revenue LTV over ad-only CAC — the two flattering variants — can easily double the apparent ratio and lead you to overspend on acquisition. The monthly contribution input is ARPU × margin for subscriptions, or AOV × purchases per year × margin ÷ 12 for repeat purchase.
Can my LTV:CAC ratio be too high?
Possibly. A ratio far above 5:1 is flagged as informational rather than celebrated, because it often means acquisition spend is well below what the unit economics could support — competitors willing to accept 3:1 can outbid you for customers you could have profitably won. It can also simply mean your LTV estimate is optimistic, which is worth ruling out first.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.