LTV:CAC ratio
LTV:CAC compares customer lifetime value to acquisition cost. The conventional healthy floor is 3:1 on gross-margin LTV; below 1:1 every customer loses money.
The ratio is directionally sound and easily gamed: LTV is a projection you control, and nudging the churn assumption makes any ratio achievable. Keep it honest by computing LTV on gross margin with realized cohort retention, and treat the ratio as a portfolio check while CAC payback — which uses only observed cash — governs month-to-month decisions.
Well above 5:1 usually signals under-investment in growth rather than brilliance: you could profitably acquire more customers than you currently are.
Want to know what yours is?
The free audit reads your actual account and computes the numbers behind every one of these definitions — no generic benchmarks.
Run the free audit