Sanity-Check CAC With LTV
Estimate whether a paid ecommerce campaign can scale by comparing contribution LTV to CAC.
stat-tile-trio worked-calculation payback-meter A premium dog treat campaign has $31 CAC, $38 first-order AOV, and a category with repeat purchase potential. Contribution LTV should exceed CAC on a timeline the business can fund. The common trap is using total revenue as LTV and ignoring gross margin, discounts, shipping subsidies, returns, and time to payback. First-order contribution $38 AOV x 52 percent gross margin = $19.76 contribution before marketing. Revenue is not enough. Acquisition is paid from contribution after variable costs, not from top-line sales. Repeat assumption Cohorts show 2.4 orders per new customer within six months when the first order…
Sign up free — one personalized lesson every day, matched to your role and goals.
Already have an account? Sign in