Unit Economics Calculator
Find out whether each customer makes or loses money for your business. Enter your acquisition cost and revenue numbers to see LTV, the LTV to CAC ratio, the payback period, and a plain-language verdict on the health of your unit economics.
How to read these metrics
- LTV:CAC ratio shows how many times over a customer pays for their own acquisition. Below 1 means you lose money on every customer. Between 1 and 3 means the business can work but has little room for error. Above 3 is the classic healthy target. Above 5 or 6 may mean you are under-investing in growth.
- Payback period shows how long your cash is tied up. For most startups, under 12 months is strong and under 6 months is excellent. A payback longer than the average customer lifetime means you never recover the cost.
- Monthly contribution is the engine of the whole model. If it is small, even a long lifetime will not produce an attractive LTV.
Unit economics explained for beginners
Unit economics answers one question: does the business make money on a single customer? If the answer is yes, growing faster usually means earning more. If the answer is no, growing faster just burns money faster.
- CAC (customer acquisition cost): everything you spend on marketing, ads, sales salaries, commissions, and discounts, divided by the number of new customers you won in the same period.
- LTV (lifetime value): the total gross profit you expect from one customer before they leave. Calculated as monthly revenue per customer × gross margin % × lifetime in months.
- Gross margin: use margin after direct costs, not after rent and salaries. Fixed costs are covered later by volume.
- Churn: the share of customers you lose each month. Low churn is the most powerful lever in this calculator because it stretches lifetime and LTV.
To improve your unit economics, you have three levers: acquire customers more cheaply, earn more per customer, or keep customers longer. Keeping customers longer (reducing churn) usually helps the most.
Frequently asked questions
What is a good LTV to CAC ratio?
A ratio of 3 to 1 or higher is generally considered healthy. Below 1 means you lose money on every customer. Between 1 and 3 is workable but fragile, and far above 5 can mean you are spending too little on growth.
How do I calculate lifetime from churn?
Divide 100 by your monthly churn percentage. A 5% monthly churn implies an average lifetime of about 20 months. The calculator does this automatically when you choose the churn mode.
What is a good CAC payback period?
Under 12 months is strong for most businesses and under 6 months is excellent. The payback period must always be shorter than the average customer lifetime, or the acquisition cost is never recovered.