MarginKoala

How does customer contribution compare with acquisition cost?

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Compare contribution LTV with CAC on a consistent customer definition. MarginKoala keeps a loss-making customer value negative instead of silently turning it into zero.
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Product/supplier cost plus other costs that occur because the order happens. If this is above AOV, the customer contribution stays negative.

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Use the same acquisition scope and period as the spend.

Koala's Calculated Result
Contribution LTV divided by CAC.

Use Basic inputs to derive both sides, or Advanced when you already have contribution LTV and CAC calculated on consistent definitions. CAC must be above zero to form a ratio.

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Frequently asked questions

What is the LTV:CAC ratio?

LTV:CAC is the gross-profit value of a typical customer divided by the cost to acquire one. A 3:1 ratio means customers produce three times the cost to acquire them — the rough threshold at which acquisition economically pays for itself.

LTV:CAC

Why is 3:1 the rule of thumb?

A 3:1 ratio leaves ~$2 of value for every $1 of acquisition cost — enough to cover operating overhead, fundraising round dilution and the inevitable misfires from a new campaign. Below 3:1, every new customer is a partial loss at the unit-economic level.

LTV:CAC

Should I use gross or contribution LTV?

Use contribution LTV — gross profit per order, not revenue — so the ratio matches the actual cash position. A 'LTV:CAC at 3:1 on gross profit' is what you want, not a revenue-LTV ratio that hides the contribution.

LTV:CAC

What if my LTV:CAC is below 1:1?

If contribution LTV is below CAC on the same customer basis, acquisition cost exceeds the modelled customer contribution. The calculator can show that gap; price, retention, channel and spend changes should be evaluated as separate scenarios rather than against a universal ratio target.

LTV:CAC

Educational use, not financial advice. Numbers are estimates for planning; consult a qualified professional before acting on them.