What does a customer actually cost you?
CAC, lifetime value, the ratio between them and how long your money is out the door. The same math we run on client paid programs, free and ungated.
Your numbers, your currency, detected from where you are. Switch it anytime.
Step 1 / Acquisition cost
Step 2 / Lifetime value
CAC
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LTV (contribution)
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LTV : CAC
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CAC payback
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Benchmarks are commonly used industry heuristics, not guarantees. The right targets depend on your margin structure and cash position.
The math, in the open
- CAC = monthly marketing spend ÷ new customers
- LTV = AOV × gross margin × orders per year × years retained
- LTV : CAC = LTV ÷ CAC
- Payback = CAC ÷ (annual contribution per customer ÷ 12)
LTV here is contribution-based: margin applied before anything else. Most calculators skip that step because revenue-based LTV produces a prettier ratio.
CAC questions
Asked every week.
Everything you spend to acquire customers in the period: ad spend, agency fees, marketing tools, creator fees, and the salary share of people doing acquisition work. Brands that only count ad spend understate CAC, then wonder why the maths never adds up to the bank balance.
A commonly used benchmark is around 3:1. Below 1:1 you lose money on every customer. Between 1 and 3, the model works but payback is slow and a rough quarter can sink it. Far above 5:1 can mean you are under-investing in growth. Treat these as starting points, not laws: the right ratio depends on your margin and how fast you need cash back.
Because revenue is not money. If your gross margin is 40%, only 40% of each order is contribution that actually pays back acquisition cost. LTV computed on revenue flatters every brand; LTV computed on contribution tells the truth.
Usually one of three things: the creative is tired (most common), the targeting is buying the wrong people, or the offer is weak at the landing page. CAC compounding down month over month is mostly a creative-testing discipline, which is exactly the unglamorous work most paid programs skip.
If the ratio hurt to look at
CAC is a creativeproblem first.
Most high CACs are tired creative, not broken audiences. That is the part we fix first.