LTV:CAC Calculator
Find out what a customer is really worth and whether your acquisition cost is sustainable. This gives profit-based lifetime value (LTV), the LTV:CAC ratio and the CAC payback period in one calculation.
LTV uses gross profit (not revenue) so it can be compared directly with CAC.
Customer lifetime value (LTV)
AOV × margin × frequency × lifespan
LTV : CAC ratio
LTV ÷ CAC
CAC payback period
CAC ÷ gross profit per year
What is a healthy LTV:CAC ratio?
Benchmarks vary by industry and business model; use your own cohort data when available. Figures reviewed against Shopify and ecommerce analytics guidance (2026).
Frequently asked questions
Why use profit-based LTV instead of revenue LTV?
A customer who generates $128 of revenue at 60% margin returns only about $77 of gross profit. Comparing revenue LTV to what you spend (CAC) makes acquisition look better than it is. Always compare profit to cost.
How do I estimate purchase frequency and lifespan?
Use your own store data over a fixed window: frequency is total orders divided by unique customers per year, and lifespan is the average number of years a customer keeps ordering before going dormant.
What is CAC payback period?
It is how long it takes for the gross profit from a customer to cover what you spent to acquire them. A shorter payback means cash is recovered faster and growth is easier to fund.
Does a high ratio always mean good performance?
Not necessarily. A ratio far above 5:1 can mean you are being too conservative and leaving growth on the table by not spending enough on acquiring profitable customers.