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).

Total value per customer
$
Cost to acquire one customer
$

CLTV to CAC Ratio

4 : 1

Healthy

A ratio above 3:1 is generally considered healthy.

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.