Question 1

What is a healthy LTV : CAC ratio?

Accepted Answer

3:1 is the venture-backed default — every $1 spent on acquisition returns $3 in lifetime gross profit. Bootstrap and self-funded e-commerce brands often run 4:1 or higher to stay cash-positive without outside capital. Below 2:1, you're effectively buying customers at a loss once you account for overhead.

Question 2

Should LTV be revenue or gross profit?

Accepted Answer

Always gross profit. Revenue LTV looks great on a slide but ignores COGS, shipping, and processing fees — the actual cash you keep. This calculator uses gross-profit LTV so the target CAC is the real number you can spend on Meta or Google.

Question 3

How do I estimate repeat purchase rate?

Accepted Answer

Pull your last 12 months of orders by customer, count how many customers placed two or more orders, and divide by total customers. In Shopify it's under Analytics → Reports → Returning customers. If you're under 6 months old, use a category benchmark: ~25% for apparel, ~40% for consumables, ~15% for one-shot gifts.

Question 4

Why does CAC payback window matter?

Accepted Answer

If your CAC payback takes 3+ orders, you're carrying customer-acquisition cost on your balance sheet for months. That ties up cash you could be reinvesting into ads, inventory, or product. Healthy brands pay back CAC inside the first order — anything longer means you need either higher AOV, higher margin, or cheaper acquisition.

Question 5

How do I lower CAC?

Accepted Answer

The biggest CAC lever is creative quality, not bid efficiency. Stale ads inflate CPM and crush CTR — which directly raises CPA. Brands that scale profitably refresh creative weekly. ppl.studio generates AI UGC photos in under 60 seconds so you can keep CAC down without a creator team.

CAC / LTV Calculator

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