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What does the LTV:CAC ratio indicate?

Asked 4 years ago

What does LTV to CAC tell us, what would be a good ratio, and how do we calculate it?

Ltv cac ratioCustomer lifetime valueCost of acquisitionCac
+1

Gareth Browne

Friday, November 12, 2021

LTV means Life Time Value, CAC means Customer Acquisition Cost. The ratio compares the value of a customer over their lifetime compared to the cost of acquiring them.

The formula for this is as follows:

LTV/CAC ratio is the (LTV) divided by the (CAC).

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