LTV:CAC Ratio
Definition
The Lifetime Value to Customer Acquisition Cost Ratio puts the value a customer creates and the costs incurred to acquire him into perspective.
Why use it
The LTV:CAC Ratio enables you to stay on top of your marketing spendings and adapt them if necessary.
Alias | – |
Abbreviation | LTV:CAC |
Unit | Ratio |
Calculation
The average lifetime value of a customer divided by the customer acquisition cost gives the LTV:CAC Ratio.
LTV |
÷ CAC |
LTV:CAC Ratio |
Example
The average lifetime value of a company’s customers is 100 €, their CAC amounts to 25 €.
100 € |
÷ 25 € |
4:1 LTV:CAC Ratio |

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