CAC
Acquisition spend ÷ new customers: what winning one customer costs. Decision: how much you can spend to win the next one.
Free calculator
CAC and customer lifetime value calculator
This calculator turns your acquisition spend and customer behaviour into your customer acquisition cost (CAC), customer lifetime value (LTV), the LTV:CAC ratio and the months a customer takes to pay back their CAC. LTV is shown on revenue and on profit; the ratio and the payback use profit.
Berend Vrakking, founder. Last updated .
Your results
A customer brings €180.00 of profit over 3 years, €100.00 more than they cost to win.
- CAC
- €80.00
- Acquisition spend ÷ new customers
- LTV:CAC
- 2.25
- Profit LTV ÷ CAC
- LTV on profit
- €180.00
- Revenue LTV × gross margin
- LTV on revenue
- €450.00
- Order value × orders per year × lifespan
- CAC payback
- 16 months
- CAC ÷ profit per customer per month
- Profit after CAC
- €100.00
- Profit LTV − CAC
- Profit per order
- €30.00
- Profit per customer per year
- €60.00
- Most you can pay per customer
- €180.00
LTV:CAC, payback and profit after CAC use profit (order value × margin), not revenue. Lifespan and orders per year are your assumptions, so the results are a projection, not a prediction.
The start values are illustrative data.
How it works
Every step behind the numbers, worked through for the start values.
Illustrative data. An example shop spent €10,000.00 to win 125 new customers. A customer places 2 orders a year at €75.00 excl. VAT, with a gross margin of 40%, and keeps buying for 3 years.
| Step | Calculation | Result |
|---|---|---|
| CAC | €10,000.00 ÷ 125 new customers | €80.00 |
| Revenue per customer per year | €75.00 × 2 orders | €150.00 |
| LTV on revenue | €150.00 × 3 years | €450.00 |
| LTV on profit | €450.00 × 40% | €180.00 |
| LTV:CAC | €180.00 ÷ €80.00 | 2.25 |
| Profit per customer per month | €75.00 × 40% × 2 orders ÷ 12 | €5.00 |
| CAC payback | €80.00 ÷ €5.00 | 16 months |
| Profit after CAC | €180.00 − €80.00 | €100.00 |
A new customer cost €80.00 and brings €180.00 of profit over 3 years, so €100.00 is left after winning them: an LTV:CAC of 2.25. The €80.00 is back after 16 months. On revenue the same customer looks worth €450.00, but that is not what you keep, so the ratio uses the €180.00 of profit.
What each number means
Six numbers, and the decision each one informs.
LTV on revenue
Order value × orders per year × lifespan. It ignores what the products cost, so it overstates what a customer is worth. Decision: none on its own; read it next to the LTV on profit.
LTV on profit
LTV on revenue × gross margin: the profit a customer brings over their lifespan. It is also the most you can pay to win them. Decision: your ceiling for CAC.
LTV:CAC
LTV on profit ÷ CAC. 1 is break-even: the customer repays what they cost and nothing more. Decision: whether acquisition pays, and how much profit is left to cover overheads.
CAC payback
CAC ÷ profit per customer per month: how long a customer takes to earn back their cost. Decision: how long cash stays tied up in new customers.
Profit after CAC
LTV on profit − CAC: what is left per customer once they are won. Decision: whether to increase or lower the acquisition budget.
This calculator works on one average customer. Product Metrics shows nCAC per product and as an average.
Limits
What an LTV:CAC ratio cannot tell you, and what to check next to it.
What a customer will do
Orders per year and lifespan are assumptions, not predictions. Use one acquisition cohort, including one-time buyers, and align the frequency and lifespan measurement. The shortcut 1 ÷ (1 − annual retention) assumes a constant annual retention rate.
What the margin leaves out
A gross margin ignores shipping, payment fees and returns. Use the contribution margin for a stricter LTV, especially if returns are high.
Which customers are worth most
One average can hide that customers who start with one product come back more often than customers who start with another. Compare new customers by first product before you trust a single number.
How accurate the inputs are
Product Metrics is not an attribution tool. CAC depends on the new customers and spend your shop and ad platform recorded.
CAC and LTV questions, answered.
What is a good LTV:CAC ratio?
Measure it on profit. Above 1, a customer repays what they cost to win. How far above depends on your overheads and how long you can wait: keeping half of a customer's lifetime profit after acquisition needs a ratio of 2, and two thirds needs 3. At the example's 2.25 you keep 55.56% of lifetime profit before fixed costs. A ratio of 3 is a common SaaS rule of thumb that we haven't verified for ecommerce.
How do you calculate customer lifetime value?
Multiply average order value by orders per year and by lifespan in years for LTV on revenue: €75.00 × 2 × 3 = €450.00. Multiply by gross margin for LTV on profit: €450.00 × 40% = €180.00. For a constant annual retention model, estimated lifespan is 1 ÷ (1 − annual retention). Use retention from the same acquisition cohort. At 60% retention that is 2.5 years, and the same customer is worth €150.00 in profit.
How is the CAC payback period calculated?
Divide CAC by the profit a customer earns per month. Profit per month is order value × margin × orders per year ÷ 12, so €80.00 ÷ €5.00 = 16 months. It assumes orders spread evenly through the year. If a customer's first order carries most of the profit, real payback is faster. A payback longer than the lifespan (36 months here) means the customer never repays their cost.
What counts as acquisition spend?
Ad and marketing spend that won new customers in the period. All marketing spend divided by new customers gives a fully loaded CAC; ad spend alone is closer to nCAC, the cost of a new customer in ads. Pick one and keep it the same each period, and count only customers who had not bought before: dividing by all orders gives cost per order, not CAC.
Embed this calculator
Paste this script tag into your own page to show the calculator there, with the same maths and no sign-up. It fits the width of your page, resizes with the calculator and follows the visitor’s light or dark setting.
The script adds the calculator and a link to the full version under it. Keep the attribution link: it credits the calculator.
See which products perform, and which don’t.
Product Metrics segments your products by advertising clicks and return against your target, then writes each segment to a Merchant Center label your campaigns use.
Analyse your products for freeLog in with Google, no credit card