Mr Calcu | Quickly uncover your customer profitability and make smarter growth decisions with our LTV to CAC ratio calculator.

Master profitability and boost ROI using our LTV to CAC ratio calculator. Discover hidden value in your customer base with this powerful, insightful tool.

LTV to CAC Ratio Calculator Description

What Is the LTV to CAC Ratio?

The Lifetime Value to Customer Acquisition Cost (LTV to CAC) ratio helps assess the profitability and sustainability of your customer acquisition strategy.

• LTV (Customer Lifetime Value) estimates the total revenue generated from a customer during their relationship with your business.
• CAC (Customer Acquisition Cost) is the total expense to acquire a new customer, including marketing and sales costs.
• A higher LTV to CAC ratio signals more efficient, profitable growth.

Key Formulas

• LTV = ARPU × Gross Margin × Average Customer Lifespan
• CAC = Total Sales & Marketing Expenses / Number of New Customers
• Ratio = LTV / CAC

Real-World Example: SaaS Startup

• ARPU = $50/month
• Gross Margin = 80%
• Average Customer Lifespan = 24 months
• CAC = $600

LTV = $50 × 0.8 × 24 = $960
Ratio = $960 / $600 = 1.6:1

This business is likely overspending on customer acquisition or not retaining customers long enough.

Real-World Example: eCommerce Brand

• Ad Spend = $10,000
• New Customers = 500
• Average Revenue per Customer = $250
• Gross Margin = 60%

CAC = $10,000 / 500 = $20
LTV = $250 × 0.6 = $150
Ratio = $150 / $20 = 7.5:1

This shows strong marketing efficiency and highly profitable customer relationships.

Advanced Tips

• Segment ratios by acquisition channel, cohort, or product line.
• Account for churn when calculating customer lifespan.
• Use annualized metrics if your business is seasonal.
• Reinvest if your ratio is extremely high—growth may be under-optimized.

Start calculating now and unlock actionable insights that fuel smarter growth.