LTV:CAC Ratio

The LTV:CAC Ratio compares total expected customer lifetime value against the cost to acquire that customer. This ratio indicates the efficiency and profitability of acquisition spending. A healthy ratio is typically 3:1 or higher, meaning customers generate 3x or more revenue than the cost to acquire them. This metric directly impacts business viability—low ratios indicate unsustainable acquisition economics. Used to guide pricing and CAC budgeting decisions.