CAC to LTV Calculator

• Total acquisition cost = marketing + sales + tools + agency
• CAC = total acquisition cost ÷ new customers
• Contribution per period = (AOV × orders per period) × gross margin
• Simple LTV ≈ (contribution per period × lifespan) ÷ discount adjustment
• Cohort LTV = Σ contribution × retention^t ÷ (1 + discount)^t
• Subscription LTV ≈ (revenue per user × gross margin) ÷ churn, then discounted
• LTV:CAC = LTV ÷ CAC
• Payback = CAC ÷ contribution per period
• Max CAC = LTV ÷ target ratio

1. Select your time period that matches reporting.
2. Enter acquisition costs and the number of new customers.
3. Pick an LTV model that fits your data quality.
4. Fill AOV, frequency, margin, and retention or churn.
5. Press Calculate to see results above the form.
6. Export CSV or PDF for sharing and documentation.

CAC and LTV basics for ecommerce

CAC is total acquisition cost divided by new customers. LTV estimates total contribution earned per customer. Contribution uses gross margin, not top-line revenue.

Use clean data and review results after each campaign cycle.

Track CAC monthly and compare it with modeled LTV. Use one period across channels for fair comparisons.

What this calculator reports

The calculator outputs total acquisition cost, CAC, and modeled LTV. It also shows LTV:CAC and payback periods. Payback equals CAC divided by contribution per period.

The Plotly chart compares CAC and LTV side by side. A gauge highlights the ratio for quick reviews. Export CSV and PDF for team sharing.

Inputs that move LTV quickly

Average order value increases contribution immediately. Order frequency compounds value each period. Gross margin reduces payback time. Retention extends customer lifespan and raises total contribution.

Example sensitivity shows impact. AOV 60, margin 55%, and frequency 1.2 yields 39.6 contribution. Over 12 months, simple LTV approaches 475 before discounting.

How to read LTV:CAC targets

Many ecommerce teams target ratios near 3.0. Ratios above 4.0 can support faster scaling. Ratios below 2.0 often need margin or retention improvements.

Use the target field to compute a max CAC cap. That cap guides bidding and affiliate rates. Set tougher targets for volatile sources.

Payback planning for growth

Payback focuses on timing, not totals. A high ratio with slow payback can strain cash. Many brands aim for payback under six months.

Discount rate adds realism to long horizons. Use 0.5% to 2% per month for planning.

Ways to improve CAC to LTV

Improve margins using bundles and pricing tests. Increase repeat rate with replenishment and loyalty. Reduce churn with better onboarding and faster support.

Track cohorts by channel and landing page. Update assumptions monthly as CPMs and conversion rates change.

FAQs

What is a good CAC for ecommerce?

A good CAC depends on margin and repeat buying. Compare CAC to contribution per period. If payback is fast and LTV:CAC stays above your target, CAC can be acceptable.

Should I use revenue or contribution for LTV?

Use contribution when making spend decisions. Contribution uses gross margin and reflects real unit economics. Revenue-only LTV can hide fulfillment costs and returns.

Which LTV model should I choose?

Use Ecommerce simple when you know frequency and lifespan. Use Cohort retention when you track period retention. Use Subscription style when churn is stable and billing repeats.

Why add a discount rate?

Discounting reduces the value of far-future cash flows. It makes long lifespans more realistic. Use a small rate per period when capital is costly or demand is uncertain.

How does payback differ from LTV:CAC?

LTV:CAC is a long-run efficiency ratio. Payback is a timing metric. A high ratio with slow payback can still strain cash flow during scaling.

Can I include refunds and returns?

Yes. Reduce gross margin to reflect returns and refund costs. You can also lower AOV to reflect net revenue. Use the same approach across channels for fair comparisons.