Unit Economics

Unit economics in MerchantFlow gives you the four numbers that determine whether your business can scale profitably: true CAC, time-bounded LTGP, LTV:CAC ratio, and CAC payback period. The page also surfaces the break-even floor that every new-customer order has to clear before paid acquisition stops bleeding cash.

What Are Unit Economics?

Unit economics measure profit at the per-customer level rather than at the company level. Three numbers matter most:

• True CAC - what you actually pay to acquire one new customer, calculated as total ad spend divided by new customers acquired in the same period. This is not platform CPA (which excludes upper-funnel and untracked spend).
• LTGP - lifetime gross profit per customer, measured over a configurable window (90, 180, or 365 days).
• LTV:CAC ratio - LTGP divided by CAC. A ratio above 3:1 is considered healthy; below 1:1 means you are paying more to acquire customers than they generate in margin.

How to Access Unit Economics

Navigate to Customers > Unit Economics from the main navigation.

The page uses the global timeframe selector to define the acquisition period (when the new customers came in) and a separate LTV window selector (90 / 180 / 365 days) to define how long their gross profit is tracked.

Volume and Conversion

The top row of the page shows the operational throughput numbers that frame the rest:

• Total Orders - paid, non-canceled orders in the timeframe
• Average Order Value - gross revenue divided by orders
• Conversion Rate - sessions converted, when Google Analytics or Shopify Analytics is connected
• Revenue / Session - revenue divided by sessions

If you do not have a sessions integration connected, the conversion-rate tiles show an empty state with a prompt to connect GA4 or Shopify Analytics.

True CAC and LTGP

True CAC

True CAC is calculated as:

True CAC = Total Ad Spend / New Customers Acquired

This blends every connected ad platform (Google Ads, Meta, TikTok, Snapchat, Klaviyo) into a single number. It is intentionally higher than platform-reported CPA because it includes spend that did not directly attribute to a conversion.

A breakdown of CAC by channel appears below the headline tiles when attribution data is available, with each row flagged as Within floor or Above break-even relative to your break-even CAC.

LTGP (Lifetime Gross Profit)

LTGP is the gross profit a cohort of new customers generates within your chosen window. The page shows three views:

• LTGP per customer in the selected window (90 / 180 / 365 days)
• Cohort size - how many new customers seeded the calculation
• Total LTGP - aggregate gross profit from that cohort

Choosing a longer window will usually raise the LTGP number, since you are giving customers more time to repurchase.

LTV:CAC Ratio and Payback Period

LTV:CAC Ratio

The LTV:CAC tile is colour-coded by health band:

• Excellent - 4:1 or higher
• Healthy - between 3:1 and 4:1
• Thin - between 1:1 and 3:1
• Unhealthy - below 1:1 (you are losing money on every new customer)

CAC Payback Period

The payback tile shows how many months it takes for cohort gross profit to recover the acquisition cost. If the cohort has not yet generated any gross profit, the tile shows a dash and explains there is "No GP from cohort yet".

Break-Even Floor

The break-even card shows the floor that every new-customer order has to clear before paid acquisition stops bleeding cash:

• New-customer Gross Margin % - margin from first purchases only
• Break-Even ROAS - 1 / GM%. Below this multiple, the first order loses money before LTV is considered.
• Break-Even CAC - the dollar amount of gross profit from a first order. CAC above this number must be justified by future repeat purchases.

The break-even floor is the single number to optimise media bids against. If your platform CPA target is below break-even CAC, scaling will compound losses regardless of LTV.

New vs Returning Customer Split

The New vs Returning card breaks revenue and gross profit into:

• New customers - first-time buyers in the timeframe, with revenue, gross profit, orders, AOV, and gross profit per first purchase.
• Returning customers - customers with at least one prior order, including repeat order count.

Returning customers usually contribute disproportionately more profit per dollar than new customers, because they carry no acquisition cost. The split makes that contribution visible.

CAC by Channel

When attribution is enabled, a per-channel table shows:

• Spend per channel
• New customers attributed to the channel
• CAC per channel (spend / new customers)
• Status - whether the channel's CAC is Within floor or Above break-even

Channels with no attributed new customers in the period show a "No attributed customers" status.

If channel attribution is unavailable, the page surfaces an informational banner explaining what to enable to unlock per-channel CAC.

Frequently Asked Questions

How is true CAC different from the CPA shown in Meta or Google Ads?

Platform CPA only counts conversions the platform can attribute to its own clicks or impressions. True CAC divides all ad spend across all new customers in the period, including untracked and upper-funnel touches. That is why true CAC is almost always higher than platform-reported CPA.

Why do my LTGP numbers change when I switch from 90d to 365d?

The LTV window controls how long each cohort is tracked for gross profit accrual. Switching from 90 days to 365 days widens the observation window, so customers in the same cohort have more time to repurchase, which raises both total and per-customer LTGP.

What is a healthy LTV:CAC ratio for ecommerce?

A widely-cited benchmark is 3:1. Below 3:1 your business is paying too much to acquire customers relative to the profit they generate. Above 5:1 you may be under-investing in growth.

Why does the page show "No new customers"?

If MerchantFlow finds zero new customers in the selected timeframe, an amber banner appears. This usually happens when the date range is too short, when orders have not yet synced, or when the dashboard is connected to a brand-new store.

Does Unit Economics depend on accurate COGS?

Yes. LTGP, gross margin, and the break-even CAC all derive from gross profit, which is calculated as revenue minus COGS. Before reading these numbers, make sure your COGS coverage is high.

Related Guides

• Cohort Analysis - retention and repurchase by acquisition month
• Customer LTV - per-customer lifetime value table with CAC and LTV:CAC ratio per customer
• Discount Codes - margin impact of every discount code you run
• COGS Management - keep gross profit calculations honest
• Ads and Channels - paid media performance feeding into CAC
• Attribution - how MerchantFlow assigns customers to channels

Last updated: May 23, 2026