LTV:CAC Calculator

Build lifetime value from order value, purchase frequency and margin, then compare it with what a customer cost to acquire.

Your numbers

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Average order value

Orders per customer per year

Total orders in a year from an average customer, from your store's reports.

Gross margin

After product cost, shipping and payment fees.

Customer lifespan

How long an average customer keeps buying before they churn.

years

Customer acquisition cost (CAC)

Your result · updates as you type

LTV : CAC ratio

3.4:1

An average customer brings $154 of gross profit over 2 years, against a $45.00 cost to acquire them.

Lifetime value (LTV): $154
CAC: $45.00
Net value per customer: $109

Healthy headroom between what a customer is worth and what they cost. Check the [CAC payback calculator](/tools/cac-payback-calculator) too: a good ratio with a slow payback can still strain cash flow.

Breakdown

Order value × orders/year × years: $384
Gross margin (40%): $154
CAC: −$45.00
Net value per customer: $109

LTV, built from numbers you already track

Lifetime value calculators often feel abstract. This one builds LTV from three things a store owner already knows: average order value, how often a customer orders in a year, and gross margin, multiplied across how long a customer typically keeps buying.

LTV = order value × orders per year × margin × customer lifespan (years) Ratio = LTV ÷ CAC

Example: the default numbers

Order value × orders/year × years: $60 × 3.2 × 2 = $384
At 40% margin: $384 × 0.40 = $153.60
CAC: $45

LTV is $154, against a $45 CAC. That's a 3.4:1 ratio, and $109 of net value per customer.

Reading the ratio

Below 1:1: you lose money on the average customer before ad spend even scales up. Fix margin, frequency or CAC first.
1:1 to 3:1: profitable, but with little room for CAC to rise. A 3:1 target is a commonly cited rule of thumb borrowed from SaaS and venture metrics, not a rule that fits every ecommerce category.
Above 3:1: comfortable headroom, though check the CAC payback calculator too. A good ratio with a slow payback can still strain cash flow.

Questions people ask

What's a good LTV:CAC ratio?

Above 1:1 means customers are worth more than they cost. Many businesses aim for 3:1 or higher as a rule of thumb, though the right target depends on how fast that value actually arrives, not just the ratio.

How do you estimate customer lifespan?

Look at how long, on average, a cohort of customers keeps ordering before going quiet for good. If you don't track this yet, start with a conservative 1 to 2 years and refine it as you gather data.

Does LTV include shipping and payment fees?

Use a margin figure that's already net of product cost, shipping and payment fees for the most accurate LTV. A rough gross margin will overstate it.

Is a high LTV:CAC ratio always good?

Not if it means you're under-spending on acquisition. A very high ratio can mean there's room to spend more on ads and still come out ahead.

Last reviewed 30 September 2026.