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Unit Economics Calculator

Analyze LTV, CAC, and payback period

Total cost to acquire one customer in USD
Average revenue per user per month in USD
Percentage of revenue after cost of goods sold
Percentage of customers lost each month
Understanding

What are Unit Economics?

Unit economics measure the direct revenues and costs associated with a single customer or unit of your business. If each customer generates more value than it costs to acquire and serve, you have a scalable model. If not, growing faster just means losing money faster.

Key Terms
LTV (Lifetime Value)

The total revenue or gross profit expected from a single customer over the entire duration of their relationship with your business.

CAC (Customer Acquisition Cost)

The total cost of acquiring a new customer, including marketing spend, sales salaries, and any other related expenses divided by the number of new customers gained.

LTV:CAC Ratio

The ratio of customer lifetime value to acquisition cost. A ratio of 3:1 or higher is considered healthy for most SaaS businesses.

Payback Period

The number of months it takes for a customer to generate enough gross profit to repay their acquisition cost.

Formulas Used
LTV
LTV = ARPU × Gross Margin × (1 ÷ Monthly Churn Rate)

Multiply average revenue per user by gross margin and average customer lifespan to get the gross-profit-weighted lifetime value.

LTV:CAC Ratio
LTV:CAC = Lifetime Value ÷ Customer Acquisition Cost

A ratio of 3:1 or higher is considered healthy, meaning each customer generates three times what it costs to acquire them.

Payback Period
Payback = CAC ÷ (ARPU × Gross Margin)

Healthy SaaS businesses aim for a payback period under 12 months so that acquisition costs are recovered quickly.

How it works

Three steps.No guesswork.

01

Enter acquisition and revenue data

Input your customer acquisition cost, average revenue per account, gross margin, and churn rate.

02

Calculate unit economics

The calculator computes LTV, LTV/CAC ratio, and CAC payback period from your inputs.

03

Assess sustainability

Review whether your unit economics support profitable scaling and where to optimize.

Use cases

Built for founderswho move fast.

Growth-stage startups

Validate that scaling acquisition spend will generate profitable returns per customer.

Channel comparison

Compare unit economics across acquisition channels to allocate budget effectively.

Fundraising preparation

Present clear unit economics to demonstrate a scalable and sustainable business model.

Deep dive

Mastering unit economics

Unit economics measure the direct revenues and costs associated with a single unit of your business — typically one customer. If each customer generates more value than it costs to acquire and serve, you have a scalable business. If not, growing faster just means losing money faster.

The three key metrics are LTV (how much a customer is worth), CAC (how much it costs to acquire one), and payback period (how long until a customer repays their acquisition cost). A healthy SaaS business targets an LTV/CAC ratio above 3:1 and a payback period under 12 months.

Unit economics should improve as you scale. Economies of scale reduce CAC through brand recognition, word-of-mouth, and optimized marketing. If your unit economics are deteriorating as you grow, it signals a problem with product-market fit or go-to-market efficiency.

FAQ

Common questionsanswered.

What is a healthy LTV/CAC ratio?+
A ratio of 3:1 or higher is considered healthy. This means each customer generates at least three times the cost of acquiring them. Below 1:1 means you lose money on every customer.
How do I calculate CAC payback period?+
CAC Payback Period = CAC / (ARPA x Gross Margin). This tells you how many months it takes for a customer to repay their acquisition cost through gross-margin-adjusted revenue.
Why are my unit economics negative?+
Common causes include high acquisition costs, low pricing, high churn, or poor gross margins. Focus on the weakest metric first — small improvements in churn or pricing often have the largest impact.

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