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Customer Lifetime Value & LTV:CAC Calculator

Updated .

This calculator measures what a customer is worth in gross profit over their whole relationship with you, against what you paid to acquire them. It returns lifetime value, the LTV:CAC ratio, and the payback period in orders — the health check for profitable acquisition.

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    Send me my LTV numbers

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    How this is calculated

    Lifetime value should be measured in gross profit, not revenue. A customer who spends $400 with you at a 20% margin is worth $80, and comparing the $400 figure to acquisition cost is how stores talk themselves into unprofitable spending.

    The LTV:CAC ratio is the standard health check. Below 1:1 you are destroying value with every customer. Around 3:1 is widely treated as healthy for ecommerce, though the number is a convention rather than a law — what actually matters is whether lifetime gross profit covers acquisition cost plus your fixed overhead with something left over.

    Payback period matters as much as the ratio. A 5:1 ratio that takes three years to materialise can still bankrupt you, because the acquisition cost is paid today and the profit arrives slowly. Watch the orders-to-recover figure alongside the ratio.

    Lifetime orders = orders per year × lifespan in years Lifetime revenue = AOV × lifetime orders Lifetime profit = lifetime revenue × gross margin % LTV:CAC = lifetime profit ÷ acquisition cost Payback (orders) = acquisition cost ÷ (AOV × gross margin %)

    Questions merchants ask

    What is a good LTV to CAC ratio?

    3:1 is the common benchmark for ecommerce. Below 1:1 you lose money on every customer. Much above 5:1 often means you are underspending on acquisition and leaving growth on the table.

    Where do I find average customer lifespan?

    Look at how long ago your customers first ordered and how many are still ordering. If your store is young, you do not have this data yet — use a conservative estimate such as 12 to 18 months and revisit it, rather than assuming a long tail that has not been observed.

    Should CAC include organic and email sales?

    Calculate CAC as total acquisition spend divided by new customers acquired, including customers who arrived organically. Dividing paid spend only by paid-attributed customers flatters the number considerably.

    Why use gross margin rather than net margin?

    Because acquisition cost is already being subtracted separately. Using net margin, which already has advertising in it, would count acquisition cost twice.

    Estimates only. Enter your own processing rates and costs — nothing here is pulled from a platform price list, so it stays accurate as fees change.