Glossary
LTV to CAC
M4.02 · M5.04Also called LTV/CAC, LTV to CAC ratio.
Lifetime value divided by acquisition cost. The working rule is that three times or better is a healthy business.
A customer worth ₹750 acquired for ₹250 gives a ratio of three.
The rule of three is a convention rather than a theorem, and it exists because the gap has to cover the fixed costs the contribution margin excluded, the time value of money, and the error in the retention assumption.
Both inputs are estimates, and both are usually estimated by people who want the answer to be above three.
Recompute it from the disclosed numbers, not the presentation.