CAC / LTV Calculator

What this tool does

Acquisition cost vs lifetime value, the only ratio your ad budget answers to

Healthy ecommerce stores aim for an LTV-to-CAC ratio of at least 3:1 - meaning every dollar spent on acquiring a customer returns at least three dollars over their lifetime. This calculator turns your ad spend, customer count, AOV, repeat rate, and gross margin into both ratio and payback period (how many months until a customer pays back their acquisition cost).

How to use it

The five inputs that define ad math

1. 1

   Enter monthly ad spend (Meta, Google, TikTok, Pinterest - all paid acquisition).

2. 2

   Enter new customers acquired this month (Shopify Customers > New).

3. 3

   Enter your AOV (Shopify Analytics > Overview).

4. 4

   Enter customer purchase frequency per year (orders per customer per year - usually 1.2-2.5 for first-time buyer cohorts).

5. 5

   Enter gross margin percentage (use the Profit Margin Calculator if you don't have it handy).

Merchant tips

Reading the ratio honestly

• ★

  An LTV:CAC ratio above 3:1 is healthy. Above 5:1 means you're under-spending on growth - you could profitably acquire more customers.

• ★

  Below 3:1 means either your acquisition is too expensive OR your retention is too weak. Don't assume it's just a CAC problem.

• ★

  Payback period under 6 months is excellent. 6-12 months is normal for most ecommerce. Over 18 months means you need either better retention or cheaper acquisition.

• ★

  Bad addresses, failed deliveries, and refunds erode LTV silently. A customer whose first order failed to deliver typically NEVER returns. Tacey prevents that pattern store-wide.

When to use this

When to recalc

What you get out

LTV-to-CAC ratio + payback period

The headline ratio (LTV:CAC) plus the payback period in months. Both are color-coded: green for healthy (3:1+, payback under 6 months), amber for marginal, red for unhealthy. Built-in benchmarks help you decide whether to scale, optimize, or pause.