LTV:CAC

LTV:CAC compares how much a customer is worth against how much it cost to acquire them, expressed as a ratio.

Neither LTV nor CAC means much alone. A ₹2,000 CAC is fine if the customer generates ₹15,000 in lifetime gross profit (7.5:1) and terrible if they generate ₹1,800 (0.9:1, an outright loss). The ratio is the actual unit-economics signal.

3:1 is the most commonly cited minimum healthy ratio in SaaS and subscription businesses (popularized by operators and investors like David Skok and Bessemer Venture Partners), though it's a rule of thumb, not a law of physics. Below 1:1, you lose money on every customer. Above roughly 5:1, the ratio can actually flag under-investment — you may be leaving growth on the table by being too conservative on acquisition spend relative to the value each customer generates.

Watch the ratio's trend over 4–6 quarters, not a single snapshot. Ratios compress as channels saturate and CAC rises, or improve as retention gets better — the direction usually matters more than the absolute number.