GLOSSARY
LTV:CAC Ratio
What is LTV:CAC Ratio?
DefinitionThe LTV:CAC ratio compares the lifetime value of a customer to the cost of acquiring them. A ratio of 3:1 or higher is the widely used benchmark for a healthy, scalable acquisition model.
Formula
LTV:CAC = Lifetime value ÷ Customer acquisition costA ratio under 3:1 usually means you’re buying revenue at a loss once you account for delivery and overhead; above 5:1 can mean you’re under-investing in growth. As a worked example, a mental health subscription acquiring patients at a $200 blended CAC (mid-range of the $120–280 band across AdBoost Health partner accounts) needs at least $600 of lifetime gross profit per patient to clear 3:1, roughly seven months of retention at $120/month and 70% margin. Health and supplement brands should target 3:1–5:1 with 35%+ contribution margin.
Related terms
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