Unit Economics Calculator

Your numbers

Try an example:

The examples use made-up numbers.

Price per customer, per month Average revenue per paying customer each month. Gross margin Share of revenue left after the direct cost of serving the customer. Monthly churn Share of customers who cancel each month. Cost to win a customer (CAC) Sales and marketing spend per new customer.

Work out CAC from total spend

Sales and marketing spend New customers won

Advanced: discount future profit

Annual discount rate A dollar next year is worth less than a dollar today. 0% ignores this.

–LTV : CAC

Lifetime value (LTV) –

Cost to win (CAC) – What you pay up front.

Payback –

Average customer stays – 1 ÷ monthly churn.

Earning back the cost of one customer

Expected gross profit from one new customer, added up month by month, allowing for the chance they cancel.

To reach 3 : 1, you'd need one of these

What if price or churn changed?

LTV : CAC for each combination. Your current numbers are outlined.

How it's calculated

Monthly gross profit = price × gross margin.
Lifetime value = monthly gross profit ÷ (monthly churn + monthly discount rate). With no discounting, that's monthly profit × the average lifetime of 1 ÷ churn months. It's the exact total of every future month's expected profit.
Payback is the first month in which the expected profit so far covers CAC. It allows for customers who cancel along the way, so it's longer than CAC ÷ monthly profit.
3 : 1 is a common rule of thumb for subscription businesses, not a law. A business can be healthy below it or struggling above it.
Assumptions: churn is the same every month, every customer pays the same price, and the customer pays for their first month.