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LTV vs CAC: what marketers should compare

2026-05-20 11:42 · Paid Marketing

LTV and CAC work together when judging growth quality. Learn what each metric measures and how to use the LTV:CAC ratio.

LTV and CAC are two of the most important metrics for judging acquisition quality.

LTV means customer lifetime value. It estimates how much revenue or gross profit a customer produces over time. CAC means customer acquisition cost. It estimates how much it costs to acquire one new customer.

The relationship matters because a campaign can produce customers at a low cost but still be weak if those customers rarely buy again. A campaign can also look expensive at first but still be valuable if customers repeat purchase, retain well, or have strong gross margin.

Many teams compare gross profit LTV with CAC. For example, if gross profit LTV is $300 and CAC is $100, the LTV:CAC ratio is 3.00:1. That suggests each customer produces about three dollars of gross profit value for each dollar spent to acquire them.

Use the LTV Calculator at /tools/ltv-calculator to estimate customer value, then use the CAC Calculator at /tools/cac-calculator to compare acquisition cost. CPA, ROAS, and ROI add more context for campaign-level decisions.