SaaS & Startupadvanced
LTV to CAC Ratio
Lifetime Value to Customer Acquisition Cost Ratio
Definition
A comparison of how much a customer is worth over their lifetime against how much it costs to win them.
Why it matters
A healthy LTV to CAC ratio shows your growth is profitable, while a low one means you are spending too much to acquire customers.
Example
A customer worth £600 over their lifetime who costs £150 to acquire gives a 4 to 1 LTV to CAC ratio.
Related terms
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