Unit Economics Calculator

What is this?

Unit economics measures the profitability of a single customer relationship. The core metrics are LTV (Lifetime Value) — total gross margin revenue from a customer over their lifespan — and CAC (Customer Acquisition Cost) — total sales and marketing spend divided by new customers acquired. The LTV:CAC ratio reveals whether each customer generates more value than it costs to acquire them.

Why it matters

A business with bad unit economics is essentially paying more to acquire customers than those customers are worth. The benchmark LTV:CAC ratio is 3:1 or higher, meaning each customer should generate 3x the profit of what it cost to acquire them. Payback period (months to recover CAC) ideally should be under 12 months. These metrics are the first thing growth-stage investors analyze.

How to use this calculator

Enter your average monthly revenue per customer, gross margin percentage, and monthly churn rate to calculate LTV. Then enter your monthly marketing spend, sales spend, and number of new customers to calculate CAC. The calculator derives your LTV:CAC ratio and payback period. Try adjusting churn rate and pricing to see how small improvements compound into dramatically better unit economics.