Canonical formula calculator
SERVICE BUSINESSES — LTV TO CAC RATIO
Whether the customers you acquire are worth what you pay to get them. For service businesses, the picture has its own shape — see the industry context below.
Worked example
How the number is worked out
The same gutter company, now asking whether that $150 was worth spending.
Starting from
Working
Each customer returns about three and a half times what it cost to win them. The figure says nothing about WHEN that money arrives — a healthy ratio paid back over three years still empties an account this month.
What this tells you
For service businesses with recurring need (HVAC tune-ups, dental cleanings, salon visits), LTV:CAC should run 4:1 or higher over a 3-year horizon — service customers are sticky if you don't actively chase them away with bad scheduling or follow-up. The math collapses fast if no-shows and missed calls erode the "L" side of the ratio; see the No-Show Rate and Missed Call Rate benchmarks for industry medians. The ratio of customer lifetime value to customer acquisition cost is one of the cleanest signals in business: a single number that tells you whether the customers you acquire are worth what you pay to acquire them. Above 3:1 is generally considered healthy. Below 1:1 means you are losing money on every customer you acquire.
When to use it
Industry benchmark — Healthy service-business LTV:CAC (3-year): 4-6:1. Check this any time you have refreshed estimates of LTV or CAC. Use it especially when deciding whether to scale acquisition spend — a high ratio means there is room to spend more on acquisition; a low ratio means you should fix economics before pouring more money in.
What it doesn’t tell you
A ratio is a snapshot. It does not tell you about payback period (how long until acquisition cost is recovered), about cohort changes over time, or about whether your unit economics are improving or deteriorating. A 3:1 ratio that is trending down is a different reality than a 2:1 ratio that is trending up.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.