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Unit Economics Calculator

Compute LTV, CAC, LTV:CAC, payback, and contribution margin against SaaS benchmarks.

Written by Golam Rabbani, Founder & Lead Engineer

Average revenue per user per month.

0-100. Revenue minus COGS as a percent.

Percentage of customers that leave each month.

Fully-loaded cost to acquire one customer.

How to use this unit economics calculator

  1. Enter monthly ARPU — the average revenue per user per month.
  2. Enter gross margin % (revenue minus COGS).
  3. Enter monthly churn % — the share of customers that leave each month.
  4. Enter fully-loaded CAC.
  5. Press Calculate. The result shows LTV, CAC, LTV:CAC, payback, contribution margin, and a health verdict.

About this unit economics calculator

Unit economics describe the profit or loss per customer. The two anchor metrics are LTV (lifetime value) and CAC (customer acquisition cost). The standard SaaS definitions (Skok, "SaaS Metrics 2.0") are LTV = (ARPU × Gross Margin) ÷ Churn and CAC payback = CAC ÷ (ARPU × Gross Margin). LTV:CAC should be ≥ 3:1 and payback ≤ 12 months for a healthy SaaS business.

Worked example. ARPU $80/mo, gross margin 75%, monthly churn 4%, CAC $300. Contribution margin = 75%. Monthly gross profit per user = $80 × 0.75 = $60. LTV = $60 ÷ 0.04 = $1,500. LTV:CAC = $1,500 ÷ $300 = 5.0 — strong. CAC payback = $300 ÷ $60 = 5.0 months — well under the 12-month benchmark. Verdict: healthy. If you doubled CAC to $600 with the same revenue side, LTV:CAC drops to 2.5 (marginal) and payback rises to 10 months (still acceptable), illustrating how each input affects the picture.

Recompute by channel — paid social and outbound sales often have very different CAC, and blended numbers can hide an unprofitable segment.

FAQ

What does "unit economics" actually mean?
It is the per-customer (or per-unit) version of your P&L: how much revenue, gross profit, and acquisition cost a single customer generates. Positive unit economics mean each new customer is profitable on a lifetime basis.
What benchmarks does this tool use?
Two: LTV:CAC ≥ 3:1 and CAC payback ≤ 12 months. Both are widely-cited targets in SaaS investor decks. The health verdict combines them — green requires both, yellow needs LTV:CAC ≥ 1, red is everything below that.
Why use monthly churn instead of annual?
Because LTV = ARPU × margin ÷ churn assumes the time unit of ARPU matches churn. If ARPU is monthly, churn must be monthly. To convert annual churn c to monthly: m ≈ 1 − (1 − c)^(1/12).
Is CAC payback the same as LTV:CAC?
No. Payback is how many months to recover CAC. LTV:CAC is the total lifetime return on that acquisition cost. A business can have a long payback (bad for cash) and still a great LTV:CAC if retention is exceptional.
Should COGS include hosting and customer support?
Yes — anything required to deliver the product to a paying customer (cloud bills, support payroll, third-party API costs) belongs in COGS. Sales and marketing live in CAC, not COGS.
Does the tool send my numbers anywhere?
No. Everything is computed locally in your browser. Inputs are cleared when you close the tab.