Ratio of Customer Lifetime Value to CAC

How to Use the Calculator – Step-by-Step

1. Enter Lifetime Value (LTV)
   Estimate how much a typical customer spends with you over a year.
2. Enter CAC
   Input your total sales and marketing cost divided by the number of new customers acquired.
3. Click ‘Calculate’
   View your ratio instantly and evaluate your business efficiency.

Tip: A ratio of 3:1 or higher is often considered a healthy balance for growth and profitability.

Understanding the CLTV to CAC Ratio

This ratio reflects the amount of revenue you earn from each customer compared to the amount you spent to acquire them.

• Ratio = 1 → You’re breaking even.
• Ratio < 1 → You’re losing money on customer acquisition.
• Ratio > 3 → Strong unit economics and healthy scalability.

Benchmarks for CLTV: CAC Ratio (2025)

Note: A ratio that is too high (e.g., 8:1) may indicate under-investment in growth.

Practical Example

Inputs:

• CLTV = ₹15,000
• CAC = ₹5,000

Calculation:

Ratio = ₹15,000 ÷ ₹5,000 = 3.0

Interpretation:

For every ₹1 you spend acquiring a customer, you earn ₹3. This is considered a strong and sustainable ratio in most industries.

Tips to Improve Your CLTV to CAC Ratio

• Reduce Customer Acquisition Costs:
  Focus on improving your marketing and sales funnel to attract customers more cost-effectively.
• Increase Customer Lifetime Value:
  Enhance customer retention through loyalty programs, upselling, and providing exceptional customer service.
• Target High-Value Customers:
  Segment your audience and focus on acquiring customers with higher lifetime values.
• Optimize Customer Onboarding:
  Provide a seamless onboarding experience to reduce churn and improve customer satisfaction.