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Free growth tool
Customer lifetime value and allowable CAC
What a customer is worth over their lifetime, how much you can spend to acquire one, and how long it takes to earn it back.
3:1 is a common healthy benchmark.
-Lifetime revenue
-Lifetime gross profit
-Allowable CAC
-First-order profit
-Orders to pay back a customer at that CAC
How to use it
Lifetime value lets you pay more for a customer than their first order is worth, but only if repeat purchases actually happen. Use real repeat rates from Shopify's customer reports, not hopes.
Frequently asked questions
How do you calculate customer lifetime value?
LTV = average order value x orders per year x customer lifespan in years x gross margin.
What is a good LTV to CAC ratio?
3:1 is a common benchmark: a customer generates three times their acquisition cost in gross profit over their lifetime.
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