E-commerce LTV:CAC works differently from SaaS. There's no monthly churn rate — instead, the key variables are repeat purchase rate, average order value (AOV), and number of purchases per year.
E-commerce LTV formula
LTV = AOV × Purchase Frequency × Gross Margin % × Customer Lifetime (years)
For a customer who spends $80 per order, 3 times per year, at 40% gross margin, for 3 years: LTV = $80 × 3 × 0.40 × 3 = $288
E-commerce CAC benchmarks by channel
| Channel | Typical CAC range |
|---|---|
| Google Shopping | $15–40 |
| Meta (Facebook/Instagram) | $20–60 |
| Influencer marketing | $25–80 |
| Email/SMS (existing list) | $1–5 |
| Organic social | $0–10 |
What LTV:CAC should e-commerce target?
For DTC brands: 3:1+ with payback in under 12 months is healthy. Subscription boxes aim for 2:1+ (acceptable due to high retention), while one-time purchase e-commerce needs 4:1+ to justify paid acquisition.
High-AOV, high-margin products can profitably acquire customers at 1:1 if the repeat purchase rate is strong. The second purchase is almost free (email/SMS cost is minimal).