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CAC and LTV should be compared together because acquisition cost is only half the story.
CAC shows how much it costs to acquire a customer. LTV estimates how much value that customer produces over time. A campaign can have a high CAC and still be profitable if LTV is much higher.
Example: If CAC is 50 and estimated LTV is 180, the LTV:CAC ratio is 3.6. If CAC rises to 80 while LTV stays 180, the ratio drops to 2.25.
The comparison should use contribution margin where possible, not just revenue. Revenue-based LTV can make acquisition look safer than it really is.
Use CAC at /tools/cac-calculator, LTV at /tools/ltv-calculator, and ROI at /tools/roi-calculator together before scaling spend.
CAC vs LTV: what marketers should compare
CAC and LTV should be compared together because acquisition cost only makes sense beside customer value.
CAC shows how much it costs to acquire a customer. LTV estimates how much value that customer produces over time. A campaign can have a high CAC and still be profitable if LTV is much higher.
Example: If CAC is 50 and estimated LTV is 180, the LTV:CAC ratio is 3.6. If CAC rises to 80 while LTV stays 180, the ratio drops to 2.25.
The comparison should use contribution margin where possible, not just revenue. Revenue-based LTV can make acquisition look safer than it really is.
Use CAC at /tools/cac-calculator, LTV at /tools/ltv-calculator, and ROI at /tools/roi-calculator together before scaling spend.
CAC
LTV
Paid Marketing
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Useful tools
ROI Calculator
Calculate ROI percentage and net return from revenue and investment cost.
CAC Calculator
Calculate customer acquisition cost from total sales and marketing spend and the number of new customers acquired.
LTV Calculator
Calculate customer lifetime value from average order value, purchase frequency, customer lifespan, margin, and CAC.
MER Calculator
Calculate marketing efficiency ratio from total revenue and total marketing spend for blended paid marketing performance.
AOV Calculator
Calculate average order value from total revenue and number of orders for ecommerce, ads, and store performance reporting.
Payback Period Calculator
Calculate customer acquisition payback period from CAC, monthly revenue per customer, and gross margin.