CLTV to CAC Ratio Calculator

Analyze the profitability of your customer acquisition efforts by calculating the ratio between Customer Lifetime Value (CLTV) and Customer Acquisition Cost (CAC).

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Ratio Analysis

Acquisition Efficiency
A ratio above 3:1 is generally considered healthy, indicating sustainable customer acquisition.
CLTV to CAC Ratio
4:1Healthy
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Understanding the CLTV to CAC Ratio

The Customer Lifetime Value (CLTV) to Customer Acquisition Cost (CAC) ratio is a fundamental metric for evaluating the sustainability and profitability of a business, especially those with recurring revenue models like SaaS. It compares the total value a business derives from an average customer over their lifetime against the cost incurred to acquire that customer.

How is the CLTV:CAC Ratio Calculated?

The calculation is straightforward:

CLTV : CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost

For example, if your CLTV is $2,000 and your CAC is $500, your ratio is $2,000 / $500 = 4. This is typically expressed as 4:1.

To use the calculator above, simply input your estimated CLTV and CAC.

Why is the CLTV:CAC Ratio Important?

  • Profitability Assessment: It directly measures whether you are making more money from customers than you spend to acquire them.
  • Marketing & Sales Efficiency: A low ratio might indicate inefficient spending on customer acquisition or a need to improve customer retention (which boosts CLTV).
  • Business Model Viability: A ratio consistently below 1:1 means the business is losing money on each new customer, signaling an unsustainable model.
  • Investor Benchmark: Investors often look for a CLTV:CAC ratio of 3:1 or higher as an indicator of a healthy, scalable business.
  • Strategic Decisions: The ratio informs decisions about scaling acquisition efforts, optimizing pricing, and investing in customer success.

What is a Good CLTV to CAC Ratio?

While benchmarks can vary by industry and business stage, general guidelines are:

  • Less than 1:1: Unsustainable. You’re spending more to acquire customers than they are worth.
  • 1:1: Breaking even on acquisition costs, leaving no room for other operational expenses or profit.
  • 3:1: Generally considered a healthy target, indicating a solid, profitable model.
  • 4:1 or higher: Excellent. Suggests a strong business model with efficient acquisition and high customer value.

Use our free CLTV to CAC Ratio calculator above to quickly assess your acquisition efficiency.