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.
Frequently asked questions
The standard formula is AOV × purchase frequency × customer lifespan. For an honest number, multiply by gross margin to get profit-basis LTV — revenue-basis LTV overstates what a customer is worth by exactly your cost of goods.
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. Well above 4–5:1 can mean you're underinvesting in growth — though for a bootstrapped store, too profitable is a good problem.
CAC payback is how many months it takes for a customer's orders to repay their acquisition cost. We calculate it as orders needed to recover CAC (CAC ÷ profit per order) multiplied by the average months between orders (12 ÷ orders per year). Under 6 months is strong for ecommerce; 6–12 is workable; beyond 12, growth consumes cash faster than customers return it.
Profit. Revenue LTV is useful for spotting trends, but comparing revenue LTV to CAC is how stores convince themselves unprofitable acquisition is working. If you track one ratio, make it profit LTV to CAC.
Because the average blends very different customers. A first purchase of a consumable can produce multiples of the LTV of a one-and-done gift buyer, and channels attract different mixes of both. Cohort analysis — LTV split by first product, channel, and acquisition month — is how you find the customers worth scaling.
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