How to read LTV:CAC
LTV:CAC compares value created by a customer with the cost to acquire that customer. A high ratio can still be weak if payback is slow, churn assumptions are optimistic or CAC excludes sales costs.
Example
If CLV is $1,400 and CAC is $350, LTV:CAC is 4.0. That means the simplified lifetime value is four times acquisition cost before considering cash timing and risk.
Common mistakes
Do not compare gross CLV with paid-media-only CAC. Use consistent definitions, and include sales, marketing and onboarding costs if those are part of your CAC policy.
Limitations
This is a simplified sales-efficiency ratio. It does not validate whether CLV was calculated from gross margin, whether CAC is blended or paid-only, or whether cohorts behave consistently.
Last reviewed: 2026-05-17