LTV:CAC ratio

The LTV:CAC ratio puts two numbers side by side: customer lifetime value (the gross profit a customer brings in before they leave) and the cost of winning a customer (ad spend, discounts, creator fees and sales costs, divided by the customers they brought in). How to read it: - Below 1:1 you lose money on every customer you win. - Around 1:1 you break even, with nothing left for overhead or growth. - 3:1 is a rule of thumb many founders and investors quote as healthy. It's a starting point, not a law: a brand with cheap repeat orders and fast payback can run lower. - Very high can mean you are underspending on growth. Use gross profit, not revenue. A $40 customer cost against $120 of lifetime revenue looks like 3:1, but at a 50% margin it's really 1.5:1. For subscriptions, watch payback too. The ratio says whether a customer pays off eventually. Payback time says when. A subscriber who needs nine renewals to cover their cost is at risk if many cancel by order four. How Chargezen handles it: Chargezen Subscriptions analytics track lifetime revenue for your subscribers, and the free lifetime value calculator works out the ratio from your own numbers.