Canonical formula calculator
E-COMMERCE BUSINESSES — LTV TO CAC RATIO
Whether the customers you acquire are worth what you pay to get them. For e-commerce businesses, the picture has its own shape — see the industry context below.
Worked example
How the number is worked out
The same gutter company, now asking whether that $150 was worth spending.
Starting from
Working
Each customer returns about three and a half times what it cost to win them. The figure says nothing about WHEN that money arrives — a healthy ratio paid back over three years still empties an account this month.
What this tells you
E-commerce LTV:CAC is calculated over 12-24 months in most categories because lifetime spend is heavily front-loaded for non-consumable goods. Healthy DTC brands target 3-5:1 over a 24-month window, with repeat purchase rate as the lever that converts a 1.5:1 first-order ratio into a 4:1 lifetime ratio. Pair this with the Repeat Purchase Rate calculator to see whether you have the customer base to compound. The ratio of customer lifetime value to customer acquisition cost is one of the cleanest signals in business: a single number that tells you whether the customers you acquire are worth what you pay to acquire them. Above 3:1 is generally considered healthy. Below 1:1 means you are losing money on every customer you acquire.
When to use it
Industry benchmark — Healthy DTC LTV:CAC (24-month): 3-5:1. Check this any time you have refreshed estimates of LTV or CAC. Use it especially when deciding whether to scale acquisition spend — a high ratio means there is room to spend more on acquisition; a low ratio means you should fix economics before pouring more money in.
What it doesn’t tell you
A ratio is a snapshot. It does not tell you about payback period (how long until acquisition cost is recovered), about cohort changes over time, or about whether your unit economics are improving or deteriorating. A 3:1 ratio that is trending down is a different reality than a 2:1 ratio that is trending up.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.