Connect ShopifyWhy this math decides everything
Every acquisition decision is a bet that a customer ends up worth more than they cost. This calculator gives you the blended answer: lifetime value on both a revenue and a profit basis, your LTV:CAC ratio, and how many months of cash you float before a customer pays their acquisition back. Run it with margin included — revenue-basis LTV is the number vendors show you because it's flattering. Profit-basis LTV is the number your bank account experiences.
How it's calculated
LTV = AOV × orders per customer per year × customer lifespan. Multiply by gross margin for profit-basis LTV. LTV:CAC divides each by your customer acquisition cost. Payback is orders needed to recover CAC multiplied by the average months between orders: (CAC ÷ profit per order) × (12 ÷ orders per year). Example: $80 AOV × 1.8 orders per year × a 1-year lifespan = $144 revenue LTV. At 50% margin that's $72 of profit LTV. Against a $45 CAC, the ratio is 1.6x on profit (3.2x on revenue), payback takes 7.5 months, and the first order loses $5 after CAC.
How to read your numbers
Below 1x on profit, you lose money on every customer, forever — no scale fixes it. Between 1x and 3x you're profitable but fragile: a CPM spike or a refund wave can push you underwater. At 3x and above you have a machine worth feeding. Payback is the cash-flow lens: past 10–12 months, growth consumes working capital, which is brutal for inventory businesses financing stock ahead of demand. And check the first-order line — buying customers at a first-order loss is a legitimate strategy, but only when you actually know your repeat behavior instead of hoping. Not sure your ads clear the profit line at all? Start with the break-even ROAS calculator.
The catch with blended LTV
Blended LTV is napkin math. In real stores, LTV varies 2–5x depending on which product a customer bought first, which channel they came from, and which month they joined. The average hides exactly the thing you need: which customers are worth acquiring more of. That's what cohort-level data is for — walk through it in our Shopify LTV calculator guide and our guide to measuring Shopify LTV that drives profit, plus the step-by-step LTV:CAC ratio and payback guide. To see it on your own store, get a free LTV Profit Map, or browse the rest of the free ecommerce calculators.
Frequently asked questions
3:1 on a profit basis is the common healthy benchmark: three dollars of customer profit for every dollar spent acquiring them. Below 1:1 you lose money on every customer. Far above 4–5:1 usually means you could afford to buy more growth.
AOV × purchases is revenue, not value. Multiply by gross margin to get profit LTV — the number your bank account experiences. Revenue LTV overstates a customer's worth by exactly your cost of goods, which is how unprofitable acquisition gets approved.
It's how many months a customer's orders take to repay their acquisition cost: orders needed to recover CAC (CAC ÷ profit per order) × months between orders (12 ÷ orders per year). Under 6 months is strong; 6–12 is workable; past 12, growth eats cash faster than customers return it.
You have to group customers by first product and acquisition source, then follow each cohort's repeat orders over time. A blended average hides which customers are worth acquiring more of. Connecting Shopify to a free LTV Profit Map does that grouping for you.
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