What is a good LTV to CAC ratio?▾
A ratio of 3:1 or higher is the widely used benchmark. Much higher than 5:1 can mean you are under-investing in growth.
Why use gross margin in LTV?▾
Revenue alone overstates value — the cost of serving the customer must come out. LTV on gross profit shows what is left to pay for acquisition.
What is a good CAC payback period?▾
Under 12 months is considered strong for subscription businesses; 12–18 months is common for B2B software.
What costs belong in CAC?▾
All sales and marketing costs for the period: ad spend, salaries and commissions of sales and marketing staff, tools and agency fees.
