PricingNest

LTV to CAC Range

Set acceptable LTV:CAC ranges by segment and growth stage.

Quick checklist

  • Define a target LTV:CAC range by segment.
  • Align payback period with cash constraints.
  • Use contribution margin for LTV.
  • Track LTV:CAC monthly.
  • Tighten targets after churn spikes.

Step-by-step

  1. Calculate baseline LTV from ARPA and churn.
  2. Compute CAC payback for each channel.
  3. Compare the ratio to target ranges.
  4. Adjust pricing or CAC to stay in range.
  5. Re-test after product or pricing changes.

What to watch

  • High LTV:CAC can mean underinvestment in growth.
  • Low LTV:CAC means pricing or churn is broken.
  • Payback period is the practical constraint.

Common mistakes

  • Using revenue instead of margin.
  • Mixing CAC from different channels.
  • Ignoring cohort differences.

Tools to use