Question 1

What is subscription pricing?

Accepted Answer

Subscription pricing is a model where customers pay a recurring fee (monthly, bi-monthly, or quarterly) for regular product deliveries. Shopify merchants commonly offer a 10-20% discount vs. the one-time price to incentivize subscribers, trading margin per order for predictable recurring revenue and higher customer lifetime value.

Question 2

What is a good LTV:CAC ratio for subscriptions?

Accepted Answer

A healthy LTV:CAC ratio is 3:1 or higher — meaning you earn $3 in lifetime profit for every $1 spent acquiring a customer. Below 1:1 means you're losing money on each subscriber. Between 1:1 and 3:1, you're profitable but have room to improve retention or reduce acquisition costs.

Question 3

How much discount should I offer for subscriptions?

Accepted Answer

Most Shopify subscription programs offer 10-20% off the one-time price. Start with 10-15% and test whether a deeper discount improves conversion enough to offset the lower per-order margin. The key metric is LTV — a smaller discount with longer retention often outperforms a bigger discount with higher churn.

Question 4

What is a good churn rate for e-commerce subscriptions?

Accepted Answer

For e-commerce subscription boxes and replenishment products, 5-10% monthly churn is common. Under 5% is excellent, meaning the average subscriber stays 20+ months. Above 15% monthly churn signals retention issues — customers are cancelling within 6-7 months on average.

Question 5

How do I calculate customer lifetime value for subscriptions?

Accepted Answer

Customer LTV = Profit per Shipment × Average Subscriber Lifespan (in months). For example, $8 profit per shipment × 10 months average lifespan = $80 LTV. Compare this to your customer acquisition cost (CAC) to ensure you're profitable — aim for LTV to be at least 3× your CAC.

Free Subscription Pricing Calculator for Shopify

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