LTV to CAC Ratio Calculator

Between 3:1 and 5:1 is the sweet spot. Below that, margins are tight or you're losing money; above 5:1, you may be underinvesting in growth.

Take average monthly revenue per account, multiply by your gross margin, and divide by your monthly churn rate. The result is the total profit you can expect from an average customer.

Divide your monthly sales and marketing spend by the number of new customers you won that month. That's what it costs to get one customer.

You're losing money on every customer you acquire. Fix it by lowering acquisition cost, raising customer value or cutting churn before spending more on growth.

Yes. A ratio above 5:1 can mean you're underinvesting in marketing and missing out on faster growth you could afford.

Either lower acquisition cost through better targeting and conversion, or raise customer value by reducing churn and improving margin. Often the quickest win is keeping customers longer.

Yes. Any business with recurring or repeat revenue, including B2B service firms, can use it as long as you know monthly revenue per account, margin and churn.

Churn decides how long a customer stays. Even a small drop in monthly churn means customers stay longer, which raises lifetime value without spending more to acquire them.