Business
LTV:CAC Ratio Calculator
Compare what a customer is worth against what they cost to win. The core test of whether growth is profitable.
Result
The revenue ratio flatters low-margin businesses. The gross-profit ratio is the number worth managing, because that is the money actually available to fund the next customer.
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About this calculator
Why is 3:1 the benchmark?
It leaves enough gross profit after acquisition to cover overhead and still fund growth. Much below and you are buying revenue with cash you do not get back quickly enough.
Is a very high ratio good?
Not necessarily. A ratio of 10:1 usually means you are under-investing in marketing and leaving growth on the table.
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