Marketing analytics
LTV to CAC ratio.
Build lifetime value from order value, orders per year, lifespan and margin. Compare it with CAC to get the ratio and the highest CAC that still meets your target.
LTV:CAC = (order value x orders per year x years x margin) / CAC. $60 x 2 x 3 x 40% is a $144 LTV; against a $48 CAC that is 3.0.
Your numbers
Result
Worked example
A customer spends $60 per order, 2 orders a year for 3 years: lifetime revenue is $360. At a 40% gross margin, LTV = $144. With a CAC of $48, LTV:CAC = 144 / 48 = 3.0. At a 3:1 target the most you could pay is $144 / 3 = $48. The revenue-based ratio would be 360 / 48 = 7.5, which overstates it because it ignores product cost.
How it works
LTV = average order value x purchase frequency x customer lifespan x gross margin. This is the margin-adjusted customer lifetime value formula Shopify gives. Without the margin factor you get lifetime revenue, which flatters the ratio.
LTV:CAC = LTV / CAC. Shopify writes it as CLV to CAC and calls 3:1 the benchmark, while noting your target depends on your margins and operating costs. Treat 3:1 as a starting point, not a rule.
Max CAC at target = LTV / target ratio. Change the target ratio box to test other thresholds.
Lifespan, frequency and order value are assumptions you supply. A new brand with little history should use cautious figures. This is not discounted for the time value of money.
Sources and basis (opened 2026-10-15): Customer Lifetime Value (CLV): Formulas and Strategies - Shopify; Customer Acquisition Cost: How To Calculate and Lower It - Shopify. Everything else is arithmetic on your inputs.
Inputs are user-entered figures. Results are planning estimates, not financial advice or a forecast of future performance. Everything runs in your browser. Nothing you type is sent or stored.
FAQ
How do you calculate LTV:CAC?
Work out lifetime value as order value x orders per year x years x gross margin, then divide by customer acquisition cost.
Is 3:1 a good LTV to CAC ratio?
Shopify calls 3:1 the benchmark and says your own target depends on margins and operating costs.
Should LTV use revenue or gross profit?
Gross profit. A revenue-based ratio ignores product and delivery costs and makes acquisition look cheaper than it is. Both are shown for comparison.
How do I estimate customer lifespan?
Use your own cohort data on how long customers keep buying. If you have little history, use a short, cautious figure and revisit it as data arrives.