Find out how much each customer is worth — and how much you can afford to spend acquiring one without losing money.
Want to improve these numbers for your business?
Free Audit →The average revenue per transaction. Calculate it by dividing total revenue by number of orders. Increasing AOV through upsells or bundles raises LTV without acquiring more customers.
Revenue minus direct costs (COGS, shipping, payment fees), expressed as a percentage. A 45% gross margin means €45 of every €100 is available profit — what actually pays for marketing.
How often a customer buys in a year. Doubling frequency from 1× to 2× doubles LTV with zero extra acquisition cost. The most underrated lever in customer economics.
Average years a customer stays active. Equals 1 ÷ annual churn rate. If 25% of customers leave each year, lifespan is 4 years. Retention improvements compound over time.
Total marketing + sales spend divided by new customers acquired. If you spent €2,000 on ads and got 40 customers, CAC = €50. Includes all costs: agency, creatives, tools, sales time.
Total gross profit a customer generates over their relationship with your business. Formula: AOV × Gross Margin × Purchase Frequency × Lifespan. The most important number in growth marketing.
The industry-standard CAC ceiling: LTV ÷ 3. Spending more makes marketing unprofitable long-term. Spending much less may mean leaving growth on the table.
A more aggressive threshold: LTV ÷ 2. Acceptable when scaling fast with strong cash flow. Risky for smaller businesses without cash reserves to sustain longer payback periods.
The ratio shows return on every euro spent acquiring a customer. Payback period is months until break-even. Under 12 months is healthy; over 18 months requires strong retention to be sustainable.