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.
What the average customer is worth to you over their entire relationship.
What it costs to acquire one new customer (marketing + sales spend divided by new customers).
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Optional — helps us match this calculation against relevant case studies (coming soon).
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.
Coming soon
Cases, plays, and benchmarks for this metric will appear here as the Moonshot knowledge libraries grow. For now: log in to track your number over time and Moonshot will surface trend warnings when the substrate fills in.