Customer acquisition cost
CAC is typically estimated by dividing relevant sales and marketing acquisition spend by the number of new customers acquired in the same measurement period.
Customer lifetime value
A simple revenue-based LTV can be estimated from average order value × purchase frequency × customer lifespan. More advanced models may use gross margin and retention curves instead.
Match the periods
Avoid comparing a monthly CAC numerator with customer counts from a different period. Cohort-based analysis is often more informative when acquisition and conversion lag.
Compare them carefully
CAC is a cost to acquire a customer; LTV is an estimate of future customer value. Compare CAC with margin-aware LTV, payback time, churn and cash timing rather than treating one ratio as a universal rule.
Use a consistent definition
Decide whether salaries, software, agencies, discounts, and overhead are included in acquisition spend, and apply that definition consistently over time.