Question 1

What is a good LTV/CAC ratio?

Accepted Answer

A ratio of 3:1 is generally considered optimal. If your ratio is lower than 1:1, you are losing money. If it is significantly higher than 5:1, you may be missing out on growth opportunities by not spending enough on acquisition.

Question 2

How often should I use this calculator?

Accepted Answer

It is recommended to calculate this ratio quarterly. However, high-growth startups should track it monthly to adjust marketing spend in real-time.

Question 3

Does this apply to all industries?

Accepted Answer

Yes, while the definition of 'acquisition cost' may vary (e.g., ad spend vs. sales commissions), the core principle of comparing acquisition cost to lifetime value is fundamental to any business model.

LTV/CAC Ratio Calculator