LTV:CAC Ratio Calculator
Calculate your LTV to CAC ratio and get an instant health assessment of your unit economics. See if you're spending too much, or too little, on customer acquisition.
Revenue per customer over the window below. Use our LTV Calculator if you need to calculate this
Use our CAC Calculator if you need to calculate this
Revenue minus cost of goods, shipping, payment fees and returns, as a share of revenue.
The period your LTV figure covers, for example 12 months.
Customers earn back what they cost, but with little to spare for everything else the business has to pay for.
On revenue the same numbers give 4.0:1, the figure most tools show.
Recommended Actions
Reduce CAC: improve targeting, optimize landing pages, test new creative
Increase LTV: launch email retention series, increase AOV with bundles
Pause your least efficient acquisition channels
This calculation is automated by
Polar Bear
Track your ratio by channel, automatically
Arktis works out CAC from your ad spend and the orders it matches to each ad platform, then shows LTV:CAC and payback blended and per platform, using the LTV and window you set in the Ads Analytics dashboard.
Start 7-day free trialThe Most Important Metric You're Not Tracking
LTV:CAC ratio is arguably the single most important metric for growth-stage businesses. It tells you whether acquiring customers is profitable and by how much. A business with a 5:1 ratio can afford to be aggressive with acquisition spend. A business with 1.5:1 needs to fix retention or lower costs before scaling.
Why Per-Channel Ratios Matter
Your blended ratio can mask channel-specific problems. For example, Facebook might deliver customers at 2:1 while organic search delivers 8:1. If you scale Facebook spend, your blended ratio drops even though individual customers are still "profitable." Track ratios per channel to make smarter budget decisions.
Frequently Asked Questions
What is the LTV:CAC ratio?
It compares what a customer is worth over a period with what it cost to acquire them. Measured on margin, a ratio of 3:1 means each customer earns $3 of margin for every $1 spent winning them. Measured on revenue the same business shows a much higher ratio, which is why this calculator asks for your margin.
What is a good LTV:CAC ratio?
The most quoted rule of thumb is 3:1, which comes from subscription software, where LTV is measured on gross margin. Treat it as a starting point rather than a law. Below 1:1 on margin, customers lose money over the window you chose; far above 5:1 can mean you are under-investing in growth.
Should LTV be revenue or margin?
Margin. Revenue includes the cost of the goods, shipping and fees, none of which is available to pay back acquisition cost. Enter LTV as revenue per customer and your contribution margin, and the calculator does the conversion.
What is CAC payback period?
How long it takes for the margin a customer earns to cover what they cost to acquire. This calculator assumes margin arrives evenly across your LTV window. Stores usually earn most of it on the first order, so if the first order's margin covers CAC, payback is effectively immediate. There is no well-sourced e-commerce benchmark: judge it by how long you can fund the gap in cash.
How do I improve my LTV:CAC ratio?
Two levers: raise the margin a customer earns you over time (repeat purchases, higher order value, better margin per order) or lower what they cost to acquire (targeting, creative, conversion rate, cheaper channels).
Does Arktis calculate LTV:CAC ratio?
Yes, blended and per ad platform. In the Ads Analytics dashboard you set your average customer LTV and the window it covers, and Arktis combines it with CAC from your ad spend and the orders it matches to each platform to show the ratio and payback. It does not calculate LTV per customer segment.
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