Free Unit Economics Calculator
Unit Economics Calculator
Calculate LTV, CAC, LTV:CAC ratio, and payback period. Subscription or transactional — with cohort projections and industry benchmarks.
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Calculate customer lifetime value (LTV), customer acquisition cost (CAC), LTV:CAC ratio, and payback period for subscription or transactional businesses. See 24-month cohort projections showing when each customer turns profitable. Includes industry benchmark comparisons so you know if your unit economics are healthy, concerning, or exceptional.
How to Calculate Unit Economics
- 1
Select your business model
Subscription (SaaS, membership) or Transactional (e-commerce, marketplace). Each model uses different inputs and LTV formulas.
- 2
Enter revenue and retention data
Subscription: monthly revenue per customer, churn rate, gross margin. Transactional: average order value, purchase frequency, customer lifespan, gross margin.
- 3
Add acquisition cost
Your customer acquisition cost (CAC) — total sales and marketing spend divided by new customers acquired. Include all costs: ads, sales team, content, tools.
- 4
Review metrics and benchmarks
See LTV, CAC, LTV:CAC ratio, and payback period with health indicators. The cohort chart shows when a customer becomes profitable. Compare your metrics to industry benchmarks.
Why Unit Economics Matter
The #1 question investors ask
After market size, "what are your unit economics?" is the most common investor question. LTV:CAC ratio above 3:1 with payback under 12 months signals a healthy, scalable business. Below 2:1 is a red flag.
Churn is a silent killer
A 5% monthly churn rate means you lose half your customers every year. This calculator shows exactly how churn impacts LTV — often the difference between a viable business and a leaky bucket.
Know your payback period
If it takes 18 months to recover your acquisition cost, you need 18 months of working capital per customer. Payback period directly determines how fast you can grow and how much funding you need.
Scenario planning
What happens if you reduce churn by 1%? Or cut CAC by 20%? The calculator shows how each change impacts your unit economics — helping you prioritize between retention, acquisition efficiency, and pricing.
Frequently Asked Questions
What is a good LTV:CAC ratio?
Above 3:1 is generally considered healthy for SaaS and subscription businesses. Above 5:1 is excellent but may indicate you're under-investing in growth. Between 2:1 and 3:1 is concerning — you're spending too much to acquire customers relative to their value. Below 2:1 means you're likely losing money on each customer.
How do I calculate LTV for a subscription business?
LTV = (Average Revenue Per User × Gross Margin) / Monthly Churn Rate. For example, $100/month ARPU × 80% margin / 5% churn = $1,600 LTV. This assumes constant churn and no expansion revenue. For more accuracy, account for expansion revenue and improving retention over time.
What should my payback period be?
Under 12 months is the standard benchmark for SaaS. Under 6 months is excellent. Over 18 months is concerning because you need significant working capital to fund customer acquisition before they become profitable. Enterprise SaaS often has longer payback (12-18 months) offset by lower churn.
How do I reduce CAC?
Five common levers: improve conversion rates on existing channels, shift spend to higher-ROI channels, invest in organic/content marketing (lower marginal cost), improve sales team efficiency (close rate, cycle time), and leverage referrals and word-of-mouth from existing customers.
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