Skip to main content
Your eCom Team

Free Tool

CAC & LTV:CAC Ratio Calculator

Enter your marketing spend, customer count, and unit economics to calculate CAC, LTV, and payback period.

Inputs

What Are CAC and LTV:CAC?

CAC (Customer Acquisition Cost) is the total cost of converting a prospect into a paying customer. It includes ad spend, agency fees, creative costs, and any other marketing expenses divided by the number of new customers acquired.

LTV (Lifetime Value) estimates the total revenue or profit a customer generates over their entire relationship with your brand. The LTV:CAC ratio compares these two numbers to tell you whether your acquisition strategy is sustainable.

A healthy LTV:CAC ratio (3:1 or higher) means every dollar spent on acquisition generates at least three dollars in customer lifetime value. This is the foundation of scalable eCommerce growth.

Formula

CAC = Marketing Spend / New Customers Acquired
LTV = AOV x (1 / (1 - Repeat Rate)) x Gross Margin
LTV:CAC = LTV / CAC

Worked example: You spend $10,000 on marketing and acquire 200 customers. AOV is $65, repeat purchase rate is 30%, and gross margin is 60%.

CAC = $10,000 / 200 = $50. LTV = $65 x (1 / 0.7) x 0.6 = $55.71. LTV:CAC = $55.71 / $50 = 1.11x. This ratio is below the 3:1 target — you need to either increase LTV or decrease CAC.

Benchmarks

LTV:CAC RatioRatingGuidance
5:1+ExcellentMay be under-investing in growth
3:1 - 5:1HealthySustainable and scalable
1:1 - 3:1MarginalImprove retention or lower CAC
< 1:1UnprofitableLosing money on every customer

Frequently Asked Questions

Let's Talk

Want help reducing your CAC and increasing LTV?

Book a Strategy Call→

Free strategy session · No contracts · Response within 24 hours