Find the most you can pay to win a new customer
Enter your order value, margin, repeat orders and return rate. See what you can spend to get a customer if you need to break even on the first order, within your payback target, or over a full year.
Free, 30 minutes, and you'll leave with at least one clear next step.
Example result
The most you can pay for a new customer
- Max CAC to break even on the first order
- Safest number, no repeat orders counted
- Max CAC within your payback target
- Counts repeat orders up to your target
- Max CAC on 12-month value
- Counts every order in the first year
You can pay up to $30.36 to break even on the first order, $48.58 to pay back within 6 months, and $66.79 on 12-month value.
How the math works
- Margin per order after returns = AOV × (1 − return rate) × gross margin %
- First-order max CAC = margin per order
- Orders inside your payback target = 1 + (orders in 12 months − 1) × (payback months ÷ 12)
- Payback max CAC = margin per order × orders inside your payback target
- 12-month max CAC = margin per order × orders in 12 months
Repeat orders are spread evenly across the 12 months after the first order, and every order has the same value and return rate. Gross margin should already take out product cost, shipping and fees.
Worked example
Example numbers only. Average order value: $60.00; Gross margin: 55%; Orders per customer in 12 months: 2.2 orders; Return rate: 8%; Target payback: 6 months.
- Margin per order after returns: $60.00 × (1 − 8%) × 55% = $30.36
- First-order max CAC: $30.36
- Orders inside a 6-month payback: 1 + (2.2 − 1) × (6 ÷ 12) = 1.6
- Payback max CAC: $30.36 × 1.6 = $48.58
- 12-month max CAC: $30.36 × 2.2 = $66.79
What is the most you should pay for a customer?
Customer acquisition cost, or CAC, is what you spend on ads and promotions to win one new customer. Max CAC is the ceiling. Spend more than this and that customer loses you money over the time frame you care about.
This calculator gives you three ceilings. The first-order number assumes the customer never comes back. The payback number counts the repeat orders you expect inside your target payback period. The 12-month number counts every order you expect in the first year. All three use margin after returns, so refunds don't inflate the answer.
How does the calculator work it out?
It starts with the margin from one order. Take average order value, remove the share that gets refunded, then multiply by your gross margin. That margin per order is your first-order max CAC.
For the payback and 12-month numbers, it multiplies margin per order by the orders you expect. If customers place 2.2 orders in their first year, which is the example number in the calculator, the 12-month max CAC is 2.2 times the margin per order.
For the payback number, the calculator spreads repeat orders evenly across the year and counts the ones that land inside your target. A six-month target counts the first order plus half of the repeat orders. The formula and a worked example sit under the calculator so you can check each step.
Which of the three numbers should you use?
Use the first-order number if cash is tight, if you're new and don't know your repeat rate yet, or if most of your customers buy once. It is the safest ceiling.
Use the payback number to set day-to-day targets in your ad accounts. It lets you pay more for customers who come back, but only as much as you'll earn back in a time frame your cash can handle. Pick a payback period that matches how long you can wait to get the money back.
Treat the 12-month number as an upper limit. It assumes customers keep buying the way they have before, and it ties up cash for a full year. Spending right up to it leaves no room for a bad month.
Which mistakes make the number too high?
Most errors push the ceiling up, which feels good until the cash runs short.
- Counting sales instead of margin. A customer worth $200 in sales might leave $80 in margin. Set your ceiling from the $80.
- Leaving out returns. Every refunded order takes its margin with it, so a high return rate lowers all three ceilings. Our guide on ad results and returns explains how to track it.
- Guessing the repeat rate. Pull it from Shopify instead. Take customers whose first order was at least a year ago and count how many orders they placed in their first 12 months.
- Using one average for every product. Customers who start with a sample or a low-price item often come back at a different rate than customers who start with a big order.
- Counting repeat orders at full price when they came from discount emails. The margin on those orders is lower, so use the margin after the discount.
How do you raise the amount you can pay?
There are two levers. The first is margin per order, through higher order values, lower shipping costs or fewer returns. Our break-even ROAS calculator shows how each of those costs moves your numbers.
The second is getting customers to come back sooner and more often. This is where email marketing earns its keep. Welcome, post-purchase and reorder flows bring first-time buyers back, which raises the payback and 12-month ceilings without touching the ads. Our email revenue calculator estimates what your list could bring in. Brands that sell things people use up, like supplements and food and beverage, have the most to gain here.
When should you talk to someone?
Talk to someone if your ad platforms show a cost per new customer above your first-order number and you can't tell whether repeat orders cover the gap. The same goes if your reports can't separate new customers from returning ones, because that split is what makes this math work.
Our paid ads team sets bids against numbers like these, and our ad tracking and reporting work separates new buyers from returning ones. See how Baked Bouquet grew to more than 10,000 new customers, or book a 30-minute call.
Max CAC calculator questions
How do I find my repeat purchase rate in Shopify?
Look at customers whose first order was at least 12 months ago. Count all the orders they placed in their first year, then divide by the number of customers. That gives you orders per customer in 12 months, which is the number this calculator asks for.
Should my payback target be shorter than 12 months?
If cash is tight or you're still testing products, yes. A shorter target means a lower ceiling but less money tied up in customers who haven't paid you back yet. The calculator lets you pick anywhere from one to 12 months.
Does max CAC include creative and agency costs?
The calculator gives you the total you can spend to win a customer. If you want the ceiling for ad spend alone, subtract your creative, agency and software costs per new customer from the result first.
How is max CAC different from customer lifetime value?
Lifetime value is the margin a customer brings in over their whole time with you. The 12-month number here is a shorter, safer version of it. Max CAC is the most you can spend based on that value, so it is the number to set bids and targets against.
Can I use this calculator for B2B or quote-based sales?
It fits businesses that sell repeat orders at a steady price. If you sell through quotes, our lead value calculator works better, since it starts from deal size and quote win rates.
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