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Break-even ROAS and LTV:CAC calculator
The same math I use to set paid media targets. Enter your numbers to see what each new customer is worth, what you can afford to pay for one, and the ROAS each campaign needs to hit.
How the math works
What is break-even ROAS?
The return on ad spend at which a first order covers its own ad cost. It is 1 divided by your contribution margin (gross margin minus variable fees such as payment processing, shipping and discounts). A 50% contribution margin means a break-even ROAS of 2.0.
Why look at 12-month LTV as well as the first order?
Many DTC brands lose money on the first order and earn it back on repeat purchases. Twelve-month contribution per customer shows how much you can afford to pay to acquire one, and the ROAS you can accept on prospecting campaigns.
What is a good LTV:CAC ratio?
A common benchmark is 3:1, meaning each customer returns three times what it cost to acquire them within the period you measure. Below 1:1 you lose money on every new customer; between 1:1 and 3:1 growth is possible but cash-hungry.
Should brand and non-brand campaigns share one ROAS target?
No. Brand search mostly captures people who already intend to buy, so its ROAS looks high. Set prospecting targets from the numbers on this page and judge brand separately.
Built by Chris Hetzler. See how these numbers shaped a real budget in the ChicknLegs measurement case study, or get in touch.