CAC and LTV decide whether growth makes you money or costs you money. This calculator works out what you pay for a customer, what that customer is worth over 12 months, and whether the ratio between them supports scaling.
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How to use it
- Monthly marketing spend: everything you spend to win new customers
- New customers per month: first-time buyers only, not total orders
- Average order value: excluding GST
- Contribution margin: the percentage of an order left after product, shipping, fees and returns
- Orders per customer in 12 months: from your own repeat purchase data
How to read your LTV : CAC ratio
- Below 1: each customer costs more than they return in a year. Fix economics before scaling
- 1 to 2: thin. Growth is fragile and cash-hungry
- 2 to 3: workable. Scale carefully and watch CAC
- Above 3: healthy. You likely have room to spend more on acquisition
Why LTV matters more than ROAS
First-order ROAS ignores everything that happens next. A brand with strong repeat purchase can afford a much higher CAC than one selling a single purchase, because the second and third orders cost almost nothing to win. That’s why retention marketing is a growth lever, not an afterthought.
How to improve the ratio
Lower CAC
Better creative, higher conversion rate, retargeting and clean tracking. See how to reduce D2C CAC.
Raise LTV
Higher AOV through bundles and thresholds, plus email and SMS flows that drive repeat orders. See Klaviyo flows every Shopify brand needs.
A note on cash flow
LTV arrives over months; CAC is paid today. Even a healthy ratio can strain a young brand’s cash. Check how many orders it takes to recover CAC, shown in the results above.
Frequently asked questions
What is a good LTV:CAC ratio?
Around 3:1 is widely treated as healthy for D2C. Below 1:1 means you lose money on each customer over the period measured.
Should LTV use revenue or margin?
Margin. Revenue-based LTV overstates a customer’s worth because it ignores product and fulfilment costs.
How do I find my repeat purchase rate?
Shopify reports returning customer rate, or divide total orders by unique customers over the same period.
Is CAC the same as cost per purchase?
No. Cost per purchase includes repeat buyers, so it’s usually lower than true CAC.
Explore more free D2C calculators, or see our D2C profitability service.