What Does a 5:1 LTV:CAC Ratio Mean for My Business?
An LTV of $500 and a CAC of $100 gives a 5:1 ratio — healthy, though ratios above 5:1 sometimes indicate under-investment in marketing.
How to use this tool
- Enter customer lifetime value (ltv) and customer acquisition cost (cac) in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your ltv:cac ratio and the full breakdown beneath it.
A 5:1 LTV:CAC ratio is excellent, but could also mean you're leaving growth on the table — this calculator helps you interpret what your ratio really signals.
Frequently asked questions
- What LTV:CAC ratio is healthy?
- 3:1 is the widely accepted minimum — you earn $3 for every $1 spent acquiring a customer. Below 1:1 means you lose money on every customer. Above 5:1 often means you could grow faster by investing more in acquisition.
- How do I improve my LTV:CAC ratio?
- You can improve it by reducing CAC (better targeting, referral programs, content SEO) or by increasing LTV (upsells, reducing churn, expanding revenue per customer). Both levers matter.