LTV:CAC Ratio
LTV:CAC ratio explained — lifetime value vs. acquisition cost. The core unit-economics health check, still ~3:1 as a 2026 benchmark.
Updated July 2026.
The ratio of customer lifetime value to customer acquisition cost — the single clearest measure of whether your growth is profitable and sustainable.
Formula
Customer Lifetime Value ÷ Customer Acquisition Cost
Benchmark range
3:1 is a minimum-viability threshold (David Skok), not a target — below ~1:1 you lose money per customer; far above ~5:1 you may be underinvesting in growth.
Why it matters
LTV:CAC cuts through channel-level noise to the bottom line: are you acquiring customers worth more than they cost? It governs how aggressively you can afford to spend.
2026 update
In 2026, acquisition costs keep climbing — CAC is up 40–60% since 2023 (Alexander Group, June 2026), and Meta's price per ad rose 12% YoY (Meta Q1 2026 earnings) — making the ratio harder to maintain — which is why high-LTV businesses can justify expensive channels that would sink low-LTV ones. Measure CAC blended across all spend (closer to MER thinking) rather than per-platform to avoid flattering the ratio.
Where it applies
- SaaS Metrics