See your LTV:CAC ratio — how the lifetime value of a customer compares to what it costs to acquire one. The single clearest read on whether growth is healthy.
Use gross-profit-based LTV (not revenue) for a true read. A very high ratio can also mean you're under-investing in growth. Estimate only.
LTV:CAC compares what a customer is worth over their lifetime to what you paid to acquire them. A ratio around 3:1 is the widely-cited healthy target — below that, growth is expensive; far above it, you may be leaving growth on the table by under-spending.
LTV:CAC = customer lifetime value ÷ customer acquisition cost
It leaves room for the costs LTV doesn't capture while still growing profitably. 1:1 means you make nothing; much above 3:1 may mean you could grow faster by spending more.
Gross profit. Revenue-based LTV overstates the ratio because it ignores the cost of serving the customer.
Related: customer lifetime value calculator · customer acquisition cost calculator · churn rate calculator · all free calculators.
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It uses standard formulas and recalculates the moment you change a value, so the math is exact for the inputs you enter. Treat the result as a reliable planning estimate; for decisions with legal or tax consequences, confirm the figures with a qualified professional.
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Last reviewed: September 2026. Free to use, no signup — LTV:CAC Ratio Calculator by ToolWise Digital.
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