CLV to CAC Ratio

How the CLV to CAC Ratio is defined and what it tells you

Valentine Strunz-Happe avatar
Written by Valentine Strunz-Happe
Updated over a week ago

The ratio of your CLV to your CAC.


Formula

Explanation

The ratio of your CLV to your CAC. The CLV already deducts all variable costs apart from marketing costs from your customers' orders. The CAC is the total marketing costs spend to generate one customer. Therefore if this ratio is >1, your customers are profitable.

Notes

  1. This number is always changing - as your customers keep placing repeat orders their CLV will increase.

  2. While CLV takes time to develop most marketing costs incur before acquiring a new customer. So, especially for date ranges focusing on recently acquired customers this ratio might look worse than it actually is because CLV didn't have enough time to develop.

Used in the following reports

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