Everyone wants a 3.0 LTV:CAC, but no one actually knows how to calculate it. Let’s walk through how we calculated LTV and CAC at gruns - and it starts with the data Most brands will go and download an app off the shopify app store, maybe it plugs into amazon, and that app will give them a LTV calculation and a CAC calculation and they will take it at face value. They are paying anywhere from $500-$2,000/mo What they don’t realize is the $12,000+ per year app isnt giving them correct data. If it did, why would we have had an all star team of 10+ people across data at gruns if we could spend $12k for the same thing? It comes down to the data transformation process. Most brand owners will tell you they are data driven, but there is still a lot of education to be had on this side of the house. Its a ‘you dont know what you dont know’ situation. In order to accurately calculate LTV:CAC you need to decompose every shopify order and all of its components so you can calculate delivered gross margin. Shopify doesn’t even give you the proper net sales out of the box so you need to start there. Shopify does not give you GAAP net sales, but if you are ingesting data yourself it is straightforward Gross Sales + Shipping Income - discounts - refunds = Net Sales. Then you have to deal with gift cards (these are not revenue at time of purchase, only time of redemption), chargebacks, refund timing, gifting, employee orders, and cancelled orders. Luckily Shopify’s data model is pretty clean. Then do the same for Amazon, TikTok Shop, and your other sales channels. At this point you’ve calculated the proper net sales for every order you’ve ever had - now you can join your COGS, 3PL, and merchant costs to that exact order to get delivered gross profit. The Shopify stuff is easy, understanding ALL of the costs associated with an order is much more difficult and might require another dozen data pipelines to get correct. Shopify gives you a customer ID so you join all the orders from each customer ID, to get their total delivered gross profit. You should be able to pick any random customer from your customer list, and you should be able to pull up their LTV with gross profit from every order they’ve placed with you. With correct data infra you can also get LTV cuts at a bunch of interesting angles to optimize the business - by SKU, geo, etc. This requires real data infrastructure, not apps from the shopify store At that point, you just divide LTV by CAC and have confidence in your numbers