True Contribution LTV & CAC Ratio Calculator
Determine net cash earnings per customer cohort over 12 to 36 months and establish verified maximum allowable customer acquisition costs (CAC).
Customer Cohort Economics
Isolate true contribution profit from top-line revenue to determine safe customer acquisition caps.
Model Assumption: Calculated using standard geometric cohort decay. Contribution LTV accounts for landed COGS, shipping, and payment fees, but excludes fixed store operating overhead.
True Contribution LTV (Cash Profit)
The actual net cash remaining from each customer after deducting product landed COGS, outbound delivery, and credit card processing.
Gross Revenue LTV
$340.00
Top-line sales vanity
Max Safe CAC (3:1)
$51.00
To maintain 3:1 ratio
A customer generates $340.00 in total revenue, but $187.00 is absorbed by product COGS, packaging, shipping, and payment gateway fees.
Spreadsheets assume a flat retention decay across all customer types. Margain connects to your confirmed Shopify order history to map true cohort retention curves and realized contribution LTV automatically.
How the Math & Economics Work
Understand the exact equations, managerial accounting rules, and unit economics governing these metrics in modern e-commerce.
Where Churn Rate equals 1 − Annual Customer Retention Rate. This models the total cumulative cash profit generated by a customer cohort after deducting direct COGS, shipping, and transaction fees across their entire brand lifespan.
Average checkout basket
$204.00 annual gross revenue
$91.80 annual contribution profit
60% churn (~1.67 years active lifespan)
Total top-line customer spend
Real cash profit is $153.31 per customer. To maintain a disciplined 3:1 contribution LTV:CAC ratio, initial customer acquisition cost cannot exceed $51.10.
The LTV Cash Flow Timing Mirage
Even with a profitable $153.31 Contribution LTV, that cash is collected incrementally over 18 to 24 months across discrete repurchase events. Performance ad networks bill every 30 days. Scaling customer acquisition against 24-month LTV without monitoring first-order cash float creates immediate working capital insolvency.
Frequently Asked Questions
Track True Cohort Contribution with Margain Financial Clarity
Pair your confirmed Shopify order transactions with accurate landed COGS and ad spend to measure cohort contribution profit and retention velocity without spreadsheet models.
Related Guides & Playbooks
Deep-dive operational frameworks explaining the unit economics, cash cycles, and marketing attribution behind this calculator.
How to Calculate Real E-Commerce LTV: Why Revenue LTV Is Bankrupting DTC Brands
Learn how to calculate true contribution LTV in e-commerce, avoid the dangerous gross revenue trap, and establish disciplined customer acquisition CAC ceilings.
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