LTV:CAC — Lifetime Value to Acquisition Cost Ratio
Definition: The ratio of what a customer is worth over their lifetime vs. what it cost to acquire them. Healthy SaaS benchmark is 3:1 or better — anything under 1:1 means you are paying to lose money.
Example
Our LTV:CAC sits at 4.2 — we can spend aggressively on acquisition because every dollar in returns four out.
When you'll hear it
LTV:CAC shows up most often in board meetings, quarterly business reviews, and strategy off-sites. When someone uses it, they're usually referring to lifetime value to acquisition cost ratio — and they expect the room to already know what that means.
FAQs
What does LTV:CAC stand for?
LTV:CAC stands for Lifetime Value to Acquisition Cost Ratio.
What does LTV:CAC mean in business and finance?
The ratio of what a customer is worth over their lifetime vs. what it cost to acquire them. Healthy SaaS benchmark is 3:1 or better — anything under 1:1 means you are paying to lose money.
Where will I hear LTV:CAC used at work?
LTV:CAC comes up most often in board meetings, quarterly business reviews, and strategy off-sites. It's used as shorthand for lifetime value to acquisition cost ratio, so people assume you already know the term.
Related terms
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