Calculate your customer acquisition cost by channel and model payback period against repeat purchase LTV.
All paid acquisition spend (Meta, Google, TikTok, etc.)
First-time buyers from paid channels in the period
Average order value for new customers
Revenue minus COGS, shipping, returns, and payment fees
Average number of orders per customer in first 12 months
CAC = Ad Spend ÷ New Customers. LTV = Repeat Orders × AOV × Contribution%In plain English
CAC = total ad spend / new customers. LTV:CAC = (avg orders × AOV × contribution margin) / CAC.
Worked Example
$25,000 spend ÷ 500 customers = $50 CAC. $85 AOV × 35% = $29.75 first-order contribution. 2.5 orders × $29.75 = $74.38 year-1 LTV. LTV:CAC = 1.49×.
Blended CAC (all spend / all new customers) masks channel-level efficiency. Meta may have $80 CAC while Google branded search has $15 CAC. Attribution gets complex — customers may see a Meta ad but convert via branded Google search.
DTC benchmarks: Meta CAC $30–$80 for fashion/beauty. Google Shopping $20–$50. TikTok $25–$60. CAC is rising in all channels — improving LTV through retention is the sustainable growth lever.
| Channel | Low CAC | Average CAC | Payback Target | Status |
|---|---|---|---|---|
Email (owned) | $2–5 | $5–10 | Immediate | |
SEO / Organic | $5–15 | $10–30 | 1st order | |
Google Shopping | $15–30 | $25–50 | 1–2 orders | |
Meta / Instagram | $25–50 | $40–80 | 2–3 orders | |
TikTok | $15–40 | $30–60 | 2–3 orders |
Source: Triple Whale DTC Benchmark 2025 · Northbeam E-commerce Attribution Report
Using last-click attribution to calculate CAC
Last-click attribution over-credits Google branded search and under-credits upper-funnel channels (Meta, TikTok). Use blended or data-driven attribution for a more accurate picture of true CAC by channel.
Not accounting for organic customers in CAC
Blended CAC = total marketing spend / total new customers. If you have strong organic (SEO, social, referral), blended CAC will be lower than paid CAC. Report both.
Scaling ad spend before proving LTV
If LTV:CAC < 1×, scaling ad spend just accelerates losses. Prove that the cohort of customers acquired at current CAC generates positive LTV before increasing budgets.