Enter Model Inputs
This calculator estimates customer economics from spend, demand, order value, margin, retention, and time-value assumptions.
Example Data Table
| Total Spend | Customers | AOV | Frequency | Margin | Retention | CAC | Discounted LTV | LTV:CAC |
|---|---|---|---|---|---|---|---|---|
| $16,000 | 250 | $80 | 4.5 | 60% | 24 months | $64 | $405.90 | 6.34 : 1 |
| $9,500 | 190 | $65 | 3.8 | 55% | 18 months | $50 | $196.63 | 3.93 : 1 |
| $22,000 | 320 | $95 | 5.2 | 58% | 30 months | $68.75 | $624.46 | 9.08 : 1 |
Formula Used
1) Total Acquisition Spend
Marketing Spend + Sales Spend + Tools and Overhead
2) Customer Acquisition Cost
CAC = Total Acquisition Spend ÷ New Customers
3) Annual Revenue per Customer
Average Order Value × Purchases per Year
4) Annual Gross Profit per Customer
Annual Revenue per Customer × Gross Margin %
5) Simple LTV
Annual Gross Profit per Customer × Customer Lifespan in Years
6) Discounted LTV
Monthly Gross Profit × Annuity Factor over Retention Months
7) LTV:CAC Ratio
Discounted LTV ÷ CAC
8) Payback Months
CAC ÷ Monthly Gross Profit per Customer
9) Recommended Max CAC
Discounted LTV ÷ Benchmark Ratio
How to Use This Calculator
- Enter all acquisition spend tied to the same period.
- Enter the total number of new customers acquired.
- Add the average order value and yearly purchase frequency.
- Enter your gross margin percentage, not markup.
- Set the average customer retention in months.
- Enter an annual discount rate for future profit adjustment.
- Choose the benchmark LTV:CAC ratio you want to meet.
- Submit the form to view results above the calculator.
Frequently Asked Questions
1) What does this calculator measure?
It measures core ecommerce unit economics, including CAC, LTV, LTV:CAC ratio, gross profit, and payback period. These figures help evaluate growth quality and scaling readiness.
2) Why use gross margin instead of revenue alone?
Revenue can overstate customer value. Gross margin removes product and fulfillment costs, giving a more realistic picture of how much profit is available to recover acquisition spending.
3) What is a good LTV:CAC ratio?
Many teams use 3:1 as a common benchmark. Lower ratios may signal weak efficiency, while much higher ratios can indicate underinvestment or room to scale profitably.
4) What does payback period tell me?
Payback period estimates how long it takes gross profit from one customer to recover CAC. Faster payback usually improves cash flow and reduces growth risk.
5) Why include a discount rate?
Future gross profit is usually worth less than immediate gross profit. A discount rate accounts for timing and gives a more conservative LTV estimate.
6) Should I include agency and software costs?
Yes. If those expenses directly support acquisition, include them. Blended CAC is more useful when it reflects the full cost of winning customers.
7) Can I use this for subscriptions or repeat buyers?
Yes. The model works for subscription, reorder, and hybrid ecommerce businesses, provided your retention and purchase frequency inputs reflect actual customer behavior.
8) Does this replace cohort analysis?
No. This is a planning model. Cohort analysis remains important for validating retention, revenue decay, channel quality, and long-term profitability assumptions.