LTV to CAC Ratio Calculator
A free LTV to CAC ratio calculator with the formula, DTC benchmarks by platform, and guidance on what a healthy ratio actually looks like for your store.
LTV to CAC Ratio
Customer lifetime value divided by customer acquisition cost — the headline test of whether your acquisition spend is profitable.
The LTV to CAC ratio compares the gross profit a customer generates over their lifetime against what you paid to acquire them. A ratio of 3:1 is the canonical target for online retail: every €1 of acquisition spend returns €3 in lifetime gross profit. Below 1:1 you're losing money on every order; above 5:1 you're usually under-investing in growth and leaving market share on the table.
The metric only works if both inputs are honest. LTV must use gross profit (not revenue), and CAC must include the full blended cost of paid media, agency fees, and platform costs — not just last-click ad spend.
LTV to CAC Ratio Calculator
Average order value
$
Average revenue per order across the last 90 days.
Gross margin
%
After COGS, fulfilment, and payment processing — not after ads.
Orders per customer (lifetime)
Average lifetime orders. Pull this from your repeat purchase rate.
Blended CAC
$
Total acquisition spend ÷ new customers acquired.
Customer LTV (gross profit)
$85.80
LTV : CAC ratio
2.26
Orders to recover CAC
1.06 orders
All inputs use the last 90 days where possible. If your repeat purchase data is thin, start with 1.5 orders per customer as a conservative default and refine once you have 6+ months of cohort data.
The calculator gives you the headline ratio in seconds, but the underlying math is worth understanding — especially because most teams over-state LTV by using revenue instead of gross profit, and under-state CAC by counting only paid media.
The formula
LTV:CAC = (AOV × Gross Margin × Orders per Customer) ÷ CAC
AOV
Average Order Value
Mean revenue per order, last 90 days, net of discounts and returns.
Gross Margin
Gross margin %
Revenue minus COGS, fulfilment, and payment fees — expressed as a decimal.
Orders per Customer
Lifetime orders
Average number of orders a customer places before churning. Derived from repeat purchase rate and cohort retention.
CAC
Customer Acquisition Cost
Total blended acquisition spend (paid media, agency, tooling, creative) divided by new customers acquired in the period.
A beauty SKU brand on Shopify with €48 AOV, 62% gross margin, 3.1 lifetime orders, and €52 CAC.
AOV: €48
Gross Margin: 62%
Orders per Customer: 3.1
CAC: €52
→ LTV €92.26 / CAC €52 = 1.77:1
Below the 3:1 benchmark despite a strong margin profile. The bottleneck is CAC inflation — likely Meta CPMs eroding the unit economics. Either CAC drops or the brand needs to push lifetime orders past 4 to hit healthy.
Notice the two sensitive levers: gross margin and lifetime orders. A 5-point margin improvement or one extra repeat order moves the ratio more than most ad-account optimisations. That's why Repeat Purchase Rate is the metric to pair with this one.
What a good LTV to CAC ratio looks like
LTV:CAC benchmarks by platform and vertical (online retail, €1M-€15M revenue band)
| Segment | Below average | Median | Top quartile |
|---|---|---|---|
| Shopify — Apparel & accessories | 1.4:1 | 2.6:1 | 4.2:1 |
| Shopify — Beauty & personal care | 1.8:1 | 3.1:1 | 5.0:1 |
| Shopify — Food & beverage (subscription) | 2.1:1 | 3.6:1 | 5.8:1 |
| WooCommerce — Home & lifestyle | 1.2:1 | 2.3:1 | 3.7:1 |
| Magento — Electronics & accessories | 1.1:1 | 1.9:1 | 3.0:1 |
| Shopify — Health & supplements | 1.9:1 | 3.4:1 | 5.5:1 |
Subscription-friendly verticals (supplements, F&B, beauty replenishables) cluster around 3.5:1 because lifetime orders compound. One-and-done categories like electronics struggle to clear 2:1 even with disciplined CAC — the fix there is attaching accessories, warranties, or trade-in flows that pull a second order.
Reading the ratio in context
A 3:1 ratio is the rule of thumb, not a law. Brands in their first 18 months should expect 1.5-2:1 while they learn channels and build retention data. Mature brands with predictable cohorts can run at 4-5:1, and anything above 6:1 usually signals under-investment — your competitors are buying market share you could be taking.
The other pitfall is timing. LTV is a forward-looking estimate based on cohorts that haven't fully matured; CAC is a backward-looking actual. If you're paying €40 today against an LTV projection built on customers acquired two years ago at lower CPMs, the ratio is flattering. Re-baseline LTV at least quarterly using your most recent 12-month cohorts.
The 3:1 trap
Hitting 3:1 doesn't mean you're profitable — it means your gross unit economics work. Operating costs (salaries, rent, software, fulfilment overhead) come out of that gross profit. Most online retailers need 3.5-4:1 just to clear net break-even, and 5:1 to fund growth without outside capital. Treat 3:1 as the floor of healthy, not the ceiling.
LTV to CAC ratio FAQ
3:1 is the canonical target for online retail — every €1 of acquisition spend returns €3 in lifetime gross profit. Below 2:1 typically can't cover operating overhead; above 5:1 usually means you're under-investing in growth.
LTV:CAC measures total profitability over a customer's lifetime; payback period measures how fast you recover the acquisition cost. A brand can have a healthy 4:1 ratio but a slow 14-month payback, which strains cash flow even though the unit economics are fine.
Always gross profit. Using revenue overstates the ratio by a factor of 2-3x for most stores. After COGS, fulfilment, and payment fees, a €100 order typically yields €50-65 in gross profit — that's the number that pays back acquisition cost.
Use blended CAC: total acquisition spend (paid media + agency fees + creative + tools) divided by new customers acquired in the same period. Don't use channel-level CAC for the headline ratio — last-click attribution understates the true cost. Our CAC calculator walks through the full inputs.
You're losing money on every customer at the gross profit level. The two fastest fixes are: cut your worst-performing acquisition channel (usually 30-40% of spend produces near-zero contribution margin) and increase Repeat Purchase Rate through email/SMS retention flows. Don't chase volume until the ratio clears 2:1.
Yes. Above 5-6:1 you're almost certainly under-spending on acquisition. Competitors with looser unit economics will outbid you on Meta and Google and capture share that should be yours. Use the headroom to test new channels or push CAC up deliberately to accelerate growth.
Monthly for CAC (it moves with media costs), quarterly for LTV (cohorts need time to mature). If your LTV input is based on cohorts older than 18 months, it's probably stale — re-baseline against your most recent 12-month cohort retention curves.
Yes, and it's usually higher — subscription products compound lifetime orders mechanically. Subscription DTC brands routinely hit 4-6:1 because churn is the only ceiling on lifetime orders. The trade-off is that LTV is more sensitive to churn-rate assumptions, so stress-test your model at +/-20% churn.
Repeat Purchase Rate is the single biggest lever on the LTV side. Moving repeat purchase from 25% to 35% typically lifts lifetime orders from ~2.0 to ~2.6 — a 30% bump in LTV with no change in CAC. It's almost always cheaper to improve retention than to lower CAC.
Both. Blended is the honest headline number for the business. Channel-level shows where you have headroom — if Meta runs at 2.1:1 but organic runs at 8:1, you can afford to push more spend through Meta as long as the blended ratio stays healthy. Don't kill a channel on its standalone ratio alone.
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