Revenue Economics · Last reviewed August 6, 2026
What is LTV-to-CAC Ratio?
The LTV-to-CAC ratio compares estimated customer lifetime value with the cost to acquire that customer. It is a directional unit-economics measure, not a universal grade: acceptable ratios vary with growth stage, capital strategy, margins, retention, payback, and the reliability of the underlying assumptions.
Why does LTV-to-CAC Ratio matter?
The ratio helps leaders see whether acquisition spending is creating sufficient long-term economic value.
How do you calculate LTV-to-CAC Ratio?
Formula: customer lifetime value divided by customer acquisition cost. Segment by cohort or GTM motion and examine CAC payback alongside it.
LTV-to-CAC worked example
- Formula: estimated customer lifetime value ÷ customer acquisition cost.
- Example: $60,000 LTV ÷ $20,000 CAC = 3.0x.
- Interpret the ratio with gross margin, retention, payback period, cohort age, and uncertainty. A clean ratio built on weak assumptions is still weak evidence.
Related terms
- Customer Acquisition Cost
- Customer Lifetime Value
- CAC Payback Period
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Use the Duet ROI CalculatorBy Duet Editorial Team · Last reviewed August 6, 2026