LTV to CAC Ratio Calculator

Direct answer

An LTV:CAC ratio of 3× means the selected lifetime value is three times the acquisition cost. It does not mean the cash is received immediately: payback timing still matters.

The secondary result subtracts CAC from LTV. With an LTV of $600 and a CAC of $200, the ratio is 600 ÷ 200 = 3× and LTV less CAC is $600 - $200 = $400. That $400 is not automatically profit because timing, overhead and any costs omitted from LTV remain outside the calculation.

Make both sides economically compatible

Do not compare gross-profit LTV with a CAC that excludes payroll, or a mature customer cohort with the acquisition cost of a new channel. Both sides should use compatible cohorts and definitions.

Label the ratio according to the LTV model. A revenue-based 3× ratio and a contribution-based 3× ratio do not represent the same economics.

Worked cohort comparison

Consider two acquisition cohorts with the same CAC:

Cohort A has the stronger lifetime relationship under the entered model. That does not prove it is the better immediate investment. If cohort A takes 24 months to recover CAC while cohort B takes four months, available cash and uncertainty can change the decision.

Interpret the result without a universal target

The calculator uses only arithmetic rules:

• Below 1×, entered LTV is lower than entered CAC.
• At 1×, entered LTV equals entered CAC before omitted costs.
• Above 1×, entered LTV exceeds entered CAC.

It deliberately does not label a particular ratio as universally good. Capital cost, gross margin, payback, retention uncertainty, operating overhead and growth strategy differ by business. A quoted benchmark is not a substitute for those inputs.

Add payback and uncertainty

LTV compresses future customer behavior into one estimate. A long forecast horizon can make the ratio look attractive while exposing the business to more retention and cash-flow risk.

Use the CAC payback guide to connect acquisition cost with contribution by period. Review the CLV models guide when choosing between a simple historical model and a retention-based estimate.

For decision-making, compare cohorts using the same observation window and model version. If the LTV methodology changes, recalculate prior cohorts before drawing a trend.

Avoid the universal 3:1 rule

A commonly quoted target cannot capture cash constraints, retention risk or growth strategy. Use the ratio alongside payback period, contribution margin and cohort retention.

Common mistakes

• Mixing revenue LTV with contribution-based targets.
• Using channel CAC on one side and fully loaded CAC on another comparison.
• Comparing mature LTV with a newly acquired cohort before enough behavior is observed.
• Ignoring the time required to recover acquisition cost.
• Updating the LTV model without restating earlier comparisons.
• Treating LTV less CAC as accounting profit.

Limits of this calculator

The tool compares two entered averages. It does not estimate LTV, discount future cash flows, model churn or determine the acceptable ratio for a business. Currency selection changes formatting only and does not perform exchange-rate conversion.

Assumptions

• LTV and CAC use compatible cohorts and accounting definitions.

Sources and methodology

CalcMotive publishes the formula and assumptions so you can decide whether the estimate fits your use case. See our methodology standards.

• Shopify: customer lifetime value; Shopify; accessed Jul 13, 2026
• Shopify: customer acquisition cost; Shopify; accessed Jul 13, 2026