Find out what your target CAC and ROAS need to be to deliver a profitable return on ad spend.
ROAS or Return on Advertising Spend typically measures the gross revenue return on the cost of your digital marketing campaigns. This is normally the total basket/cart value (includes VAT and shipping costs etc). It also normally doesn't factor in any of your other costs and can be a misleading way of measuring the profitability of your campaigns.
What we're aiming to do here is calculate what a profitable return on ad spend looks like when factoring in the average profit margins you make on the sale of your products.
Please include your average cost of goods (cost of production or buy in) shipping, fulfilment and transaction costs, if possible
This calculator petty much does it for you. We just need to know your Average Order Value and the Average Number of Transactions Over Time, Per Customer.
In the results section it shows you what your CAC needs to be to breakeven on a CLTV basis. This number is your customer lifetime value (net of cost of goods & op ex).
Your Customer Lifetime Value or CLTV is calculated based on your Average Order Value multiplied by the average number of orders from a customer, over a given timeframe. The longer the time frame, the more accurate this is (generally speaking). CLTV is normally calculated over 12 months (but can be any length of time depending on what you sell really). This can then be multiplied by a number of years to calculate average retention in years.
If you sell milk, eggs and bread, your repeat purchase rate will be much higher than a hi-end luxury fashion or electronics brand for example. You might want to know what your customer value is over 3, 6, 9, 12, 24, 60 or 120 months.
For the purposes of this calculator we'll just use whatever data you have to hand to work out where your breakeven CAC and ROAS sits, based on the timeframe of data you enter.
Fill in the form above and then you'll be presented with a modal to enter your name and email address. We don't accept free mail addresses (gmail.com, hotmail.com etc). Business emails only please :-)
Hit calculate and it takes you to the calculator where you can see your results and also play around with different scenarios.
We factor in your average order value and your average profit margin on your products to calculate the breakeven ROAS and CAC (cost of acquisition) target. We do this based on two different business models:
1) one-time-only model: your customers generally only ever make a single purchase of your core product.
2) on a lifetime value model: your customers return to make additional purchases of your core products over time.
This enables you to set your targets based on different business models and also see worse-case-to-best-case scenarios.
The team at Leaf built a new multi-channel strategy and within a month overhauled our conversion tracking implementation, set up new product feeds, re-worked our entire funnel structures and tripled our performance to deliver 3x ROAS.”
From conversion tracking & analytics to creative, channel management and data strategy. Leaf provide a 360 solution to help your brand achieve its growth potential.