LTV to CAC ratio (LTV:CAC)

Why it matters

It is a one-number check on whether growth creates or destroys value. Below 1, every new customer loses money even if they stay as long as expected.

Worked example

The table shows the columns this metric needs from six months of a made-up subscription brand. Add each column up over the six months, then put the totals into the formula:

₹14,20,800 ÷ 6,643 × (₹28,28,700 − ₹15,39,900) ÷ ₹28,28,700 ÷ (320 ÷ 6,095) ÷ (₹6,70,000 ÷ 868) = 2.40×

Add up first, then divide. Averaging the six monthly figures gives a slightly different answer, because it counts a small month the same as a large one.

Month by month

LTV:CAC calculator

How to read it

A high ratio is not automatically good: it can mean you are under-investing in growth. The useful question is how fast the acquisition cost is paid back.

Common mistakes

• Both inputs are estimates, and LTV is very sensitive to churn. Report the ratio with the assumptions behind it.
• Use the same customer definition and period for both sides.
• A blended ratio can hide a channel whose customers churn fast. Calculate it per channel when you can.

Calculate LTV to CAC ratio in Excel, SQL or Python

The quickest version, for the sample sheet laid out as in the CSV (headers in row 1, months in rows 2 to 7):

=SUM(AF2:AF7) / SUM(Z2:Z7) * (SUM(B2:B7) - SUM(C2:C7)) / SUM(B2:B7) / (SUM(Y2:Y7) / SUM(X2:X7)) / (SUM(G2:G7) / SUM(W2:W7))

• LTV to CAC ratio in Excel and Google Sheets — per-month formula and zero-safe version
• LTV to CAC ratio in SQL — query by month and for the period
• LTV to CAC ratio in Python (pandas) — pandas script with expected output

Related metrics

• Customer lifetime value (LTV)
• Customer acquisition cost (CAC)
• CAC payback period

See all business metrics, or the statistics methods that sit behind them.

Questions people ask

What is LTV to CAC ratio?

The LTV to CAC ratio compares what a customer is worth over their lifetime with what it cost to acquire them: lifetime value divided by customer acquisition cost.

How do you calculate LTV to CAC ratio?

LTV:CAC = Customer lifetime value ÷ Customer acquisition cost. For example, with six months of sample data: ₹14,20,800 ÷ 6,643 × (₹28,28,700 − ₹15,39,900) ÷ ₹28,28,700 ÷ (320 ÷ 6,095) ÷ (₹6,70,000 ÷ 868) = 2.40×.

What is the LTV:CAC formula in Excel?

With the sample data laid out as in the downloadable CSV, =SUM(AF2:AF7) / SUM(Z2:Z7) * (SUM(B2:B7) - SUM(C2:C7)) / SUM(B2:B7) / (SUM(Y2:Y7) / SUM(X2:X7)) / (SUM(G2:G7) / SUM(W2:W7)) gives the figure for the whole period. For one month, use =AF2 / Z2 * (B2 - C2) / B2 / (Y2 / X2) / (G2 / W2) and fill it down.

What is a good LTV to CAC ratio?

There is no figure that is right for every business: it depends on your products, prices and channels. A high ratio is not automatically good: it can mean you are under-investing in growth. The useful question is how fast the acquisition cost is paid back.

Check how stable it is

• Standard deviation
• Moving average
• Z-score
• Linear trend forecast

Guides

• How to find out what changed in your sales data — 2 min read
• Real change or random noise? A plain guide to reading your numbers — 2 min read
• Excel data analysis: formulas, PivotTables and the ToolPak — 3 min read

About the data on this page

The figures come from a small made-up dataset, printed above in full so you can check every number by hand. Download it as monthly.csv. The results are computed from those rows when the page is built, and the Excel formulas, SQL and Python on these pages are run against the same rows before publishing, so the code and the answers agree.

To get these numbers from your own data without writing formulas, try AnalyzeIt: ask in plain words and it shows the working behind every figure.