How to use the max CAC calculator
The max CAC calculator sets two limits on what a new customer can cost, and takes the lower one. Both limits come from your own customer numbers, not from an industry average.
- Order values: the first order value, and the repeat order value if it differs.
- Contribution margin: after product cost, shipping, fees and returns.
- Repeat orders: extra orders per customer by months 3, 6, 12 and 24, counted from the first order.
- Payback window: the months you can wait to be paid back.
- Optional: what a new customer costs you now, new customers a month and the cash you can put into growth, to see your payback month and the cash growth ties up.
Under the result come three fixes to start with. For the example they are: bring acquisition cost under the payback line, make the first order worth more, and work on the second order.
On a phone, the limit and the payback month sit under the inputs.
In Google Ads, a cost limit like this is what you would enter as the target in Target CPA bidding, when a new customer’s purchase is the conversion you bid on. The LTV CAC calculator shows where you stand today.
How it works
The tool builds a curve of the contribution a new customer brings over 24 months:
- At the first order:
first order value × contribution margin. - Then, the repeat orders you enter (extra orders per customer by months 3, 6, 12 and 24, with straight lines in between) × repeat order value × margin.
From that curve it gives two limits on what you can pay for a new customer:
- Payback limit: the contribution a customer has brought by the end of your payback window. Pay more and you won’t be paid back in time.
- Lifetime limit: the 24-month contribution ÷ 3, from the common 3 : 1 LTV:CAC rule of thumb, which leaves room for overheads and profit. It’s a convention, not a law; change your plan if your overheads are unusually low or high.
The safe maximum is the lower of the two. Enter your current cost per new customer to see in which month it pays back.
The cash growth ties up
Acquisition is paid up front; contribution arrives over months. With new customers a month, the tool runs 24 months of steady acquisition at your current cost (or at the safe maximum) and shows the lowest point of cumulative cash flow: the cash you need to fund that growth before it pays for itself.
Where to get the inputs
Repeat orders come from cohort data: of the customers who first ordered in a month, how many more orders they placed later. Shopify’s customer cohort analysis report shows this; so do most email and retention tools. Use cohorts that are at least as old as the month you enter. For a single-number check, see our LTV:CAC calculator.