Canonical: https://www.strataigize.com/glossary/ltv-to-cac-ratio/
Description: The LTV to CAC ratio compares customer lifetime value to customer acquisition cost, stating how many dollars of value each acquisition dollar buys.

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# LTV to CAC ratio.

Definition

## What it _means._

The LTV to CAC ratio compares customer lifetime value to customer acquisition cost, stating how many dollars of value each acquisition dollar buys. A commonly used planning benchmark is 3 to 1, but it is not a universal break-even point. Profitability also depends on whether value means revenue or gross profit, the costs included and when customers pay.

Worked example

## In _practice._

A business has an LTV to CAC ratio below its 3 to 1 target. The team checks its assumptions, margins and payback period, then compares changes to acquisition cost, pricing and retention. Crossing the target improves that ratio; it does not by itself establish profit or prove that more spend will perform the same way.

Where this work happens: [Paid Advertising](https://www.strataigize.com/services/paid-advertising/)

Related terms

-   [Cost per install (CPI)](https://www.strataigize.com/glossary/cost-per-install/)
-   [D7 ROAS](https://www.strataigize.com/glossary/d7-roas/)
-   [Incrementality](https://www.strataigize.com/glossary/incrementality/)

## Put it in _context._

Bring your growth question to a free 30-minute consultation. We can work through what the numbers mean and which changes to consider.

[Book a growth consult →](https://www.strataigize.com/audit/)