// Can you afford to scale?
LTV : CAC ANALYSIS
LTV:CAC measures how much lifetime gross profit you generate for every dollar spent acquiring a customer. Alongside payback period, it's one of the most useful metrics for evaluating whether customer acquisition is sustainable.
CAC = Ad Spend ÷ New Customers
LTV : CAC = Lifetime Value ÷ CAC
CAC is the average cost to acquire one new customer. LTV estimates the lifetime gross profit that customer is expected to generate. Comparing the two helps you understand whether your marketing investment creates long-term value, not just immediate sales.
Many healthy direct-to-consumer brands target an LTV:CAC ratio of around 3:1, although the ideal benchmark depends on margins, retention, cash flow, and growth strategy. Ratios below 1:1 (using gross profit LTV) generally indicate acquisition costs exceed customer value, while higher ratios suggest more efficient growth.
Use the calculator below to estimate your blended CAC, LTV:CAC ratio, and expected payback period based on your business assumptions.
// Your Inputs (monthly)
Ad Spend (monthly)
$
// total paid media across all channels
Revenue (monthly)
$
// total store revenue this month
Gross Margin
50%
// after product, shipping, fulfillment & transaction costs
New-Customer Revenue %
60%
// share of revenue from first-time buyers
Average Order Value
$
// revenue per order
Lifetime Value (gross profit)
$
// total gross profit per customer, lifetime · see Shopify guide below
Avg. Months Between Orders
3.0
// how often a customer reorders
// How to find your LTV in ShopifyThe hardest input. Tap to expand ▾
LTV is the number people get wrong most often, because "lifetime" isn't a setting you read off a dashboard. It's a decision. Here's how to pull a defensible number from your own data.
// Step 1 · Find realized revenue per customerIn Shopify admin, open the Customer cohort analysis report. It groups customers by the month they first bought, then shows the average amount each cohort has spent in the months since. Pick a cohort old enough to have a full history, and add up the per-customer spend across the months you want to count. That total is realized revenue per customer for that window.
Shopify admin → Analytics → Reports → Customer cohort analysis // Step 2 · Convert revenue to gross profitShopify's numbers are revenue, not profit. They don't subtract what your product costs you. This calculator wants lifetime gross profit, so multiply the per-customer revenue from Step 1 by your gross margin. (Spend $80 to make $40 after COGS? That's a 50% margin.)
Worked example: a 12-month cohort has spent $180 net per customer. At a 50% gross margin, your 12-month LTV is $90. That's the number to enter above.
// The three questions everyone asks
Discounts?Yes. Use net sales, which is after discounts and refunds. The cohort report is built on net sales, so promo codes and returns are already baked in. Don't use gross sales, or you'll overstate LTV and let yourself overspend on acquisition.
How many months?A choice, not a fact. The window has to be long enough to capture most of a customer's repeat purchases. For most DTC brands that's a 12-month window; use 24 if you have a long buying cycle and the history to support it.
Is it 30-day LTV?No. For a repeat-purchase brand, 30-day LTV is basically just first-order value, and it will make healthy acquisition look unprofitable. Only use a short window if you genuinely have no repeat business. If you're a newer store, use the longest complete cohort you have and label it honestly (e.g. "6-month LTV"), then revisit as the data matures.
One more note: Shopify also shows a Predicted lifetime value. That's a model estimate, useful as a sanity check, but when you have your own realized cohort numbers, trust those.
New Customers / mo—
Blended CAC—
LTV : CAC—
CAC Payback—
0:11:13:15:1+
// red = underwater · yellow = workable · green = healthy
// CAC vs. Lifetime Value
How much you pay to acquire a customer (CAC) against what they're worth (LTV). The dashed line marks the 3:1 healthy threshold.
// Notes: CAC here is "blended": total ad spend divided by all new customers, not just paid-attributed ones. LTV should be entered as lifetime gross profit (not revenue) so it's comparable to acquisition cost. This view doesn't model diminishing returns on incremental spend, channel saturation, or cash-flow timing of the payback period.
// Talk to a Partner
Need help interpreting your results?
LTV:CAC lives or dies on the inputs. Book a session and we'll pressure-test your numbers and map where you can profitably scale acquisition.
Book a Growth Planning Session →// Built by Fall Line Digital — Est. 2018