How to Use the Channel LTV Comparison Calculator
Not all acquisition channels bring in the same quality of customer, so comparing raw conversion counts alone can lead to misallocated budget. This calculator multiplies average order value, annual purchase frequency, and retention period to estimate customer lifetime value (LTV) for two channels, then subtracts customer acquisition cost (CAC) to get net LTV, a better measure of actual profitability.
A paid channel might have a higher CAC but attract customers who spend more, resulting in strong net LTV. A referral channel might have low CAC but weaker repeat purchase behavior, making its net LTV lower than expected.
By comparing the LTV-to-CAC efficiency of both channels, the calculator suggests how to split your total marketing budget between them. Since channel performance shifts with seasonality and campaigns, it's worth revisiting these numbers periodically to keep your budget allocation accurate.
Frequently Asked Questions
Net LTV (LTV minus CAC) shows the actual profit a channel generates. A channel with high total LTV can still be less profitable if its CAC is also high.
This calculator compares two channels at a time, but you can run it repeatedly on different channel pairs to rank three or more channels by relative efficiency.