LTV to CAC ratio calculator
Acquisition cost on one side, lifetime value on the other. The ratio between them is the only number that tells you whether growth is compounding or just expensive. Free, no signup.
Why this ratio and not ROAS
ROAS grades a campaign on the revenue it produced this week. The LTV to CAC ratio grades the customer that campaign bought, across everything they will ever spend. The two often disagree, and when they do the ratio is usually right: a channel with mediocre ROAS that acquires loyal customers beats a channel with flattering ROAS that acquires one-time discount hunters.
That is also why the ratio is hard to assemble by hand. Acquisition cost lives in the ad platforms, lifetime value lives in your order history, and nothing joins them without deliberate work. The full argument is in the LTV to CAC ratio for Shopify stores, and why surface metrics fail covers what goes wrong when stores judge growth on the platform-facing half alone.
Calculate the ratio per channel, not blended. A blended 3:1 made of one channel at 6:1 and one at 1:1 is a budget reallocation waiting to happen, and you cannot see it in the average. If you need the inputs first, the LTV calculator builds lifetime value from AOV and retention, and the ROAS calculator covers the campaign-level view this one sits above.
Ratio questions, answered
What is a good LTV to CAC ratio?
3:1 is the conventional target: a customer returns three times what they cost to acquire. It is a rule of thumb rather than a law. What matters more is whether you can fund the gap between paying for a customer today and earning it back over the following year.
Is a very high ratio good?
Usually it means underspending. A 8:1 ratio says every customer is wildly profitable, which normally means there are more of them you are not buying. Stores in that position often grow faster by deliberately accepting a lower ratio and a higher volume.
Should I use revenue LTV or gross-profit LTV?
Gross-profit LTV. Comparing revenue to a cash cost overstates the ratio by whatever your margin is not. At a 45 percent margin, a 3:1 revenue ratio is really 1.35:1 in profit terms, which is a very different business.
How does payback period relate to the ratio?
The ratio tells you whether a customer is worth acquiring; payback tells you how long your cash is tied up doing it. Two stores can share a 3:1 ratio while one recovers acquisition cost on the first order and the other waits four orders. The second needs far more working capital to grow at the same speed.
Most dashboards show you one side of this ratio.
By the Numbers reports acquisition cost by channel next to the lifetime value those customers go on to produce, in the same view.
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