CAC ceiling calculator
Maximum CAC you can sustain at your unit economics, given a target LTV-to-CAC ratio.
Inputs
Results
LTV = AOV × Purchases per year × Lifespan × Gross margin
Max CAC = LTV / Target LTV-to-CAC ratio
Above this CAC, the unit economics break at your target ratio. Stay below.
Aggressive CAC = LTV / 4
Tighter ratio. Use when cash is tight or growth is being judged by efficiency.
Venture CAC = LTV / 5
Conservative. The ratio venture-stage companies are increasingly held to (2024 onward).
Why this calculator is verified
The 3:1 LTV-to-CAC heuristic is the conventional benchmark for sustainable growth, established in David Skok's foundational SaaS metrics work and validated across DTC ecommerce by OpenView Partners and Klaviyo benchmark studies. The math is identity-true: LTV is gross-profit per customer over their full relationship; CAC is acquisition cost; the ratio answers "how many CACs of profit does each customer return?". A 3:1 ratio leaves enough margin for fixed costs and reinvestment after CAC payback. Ratios above 5:1 typically signal under-investment in growth (you could spend more); ratios below 2:1 signal unit-economic stress. The 4:1 and 5:1 alternative ceilings reflect tighter cash-flow or venture-grade efficiency demands and are explicitly used in the post-2022 venture environment.
Worked example
DTC supplements: $75 AOV, 4 buys/year, 2.5-yr life, 35% margin, 3:1 target
LTV = $75 × 4 × 2.5 × 0.35 = $262.50. Maximum sustainable CAC = $262.50 / 3 = $87.50. If your real CAC is $60, your LTV:CAC ratio is 4.4:1 (room to scale). If it creeps to $90, you're at 2.9:1 and below the conventional sustainability bar. The aggressive-growth ceiling at 4:1 is $65.63; venture-grade at 5:1 is $52.50. Pick the ratio that matches your cash position and stage.
Sources for the formula
- David Skok, SaaS Metrics 2.0 — the foundational LTV:CAC framework
Source of the conventional 3:1 ceiling. Math applies to ecom DTC with repeat-purchase frequency rolling into LTV.
- Bain & Company, customer lifetime value primer
Authoritative framing of the simple LTV formula this calculator uses.
- OpenView Partners, customer acquisition cost benchmarks
Empirical baselines for the LTV:CAC ratios used in the alternative ceilings (4:1, 5:1).
- Klaviyo, DTC LTV benchmarks
Empirical baseline for plausible LTV inputs in DTC ecom.
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