Pricing & Packaging Guardrails Calculator
Set guardrails for pricing changes by translating ARPA, margin, churn, and target payback into max discount and min price targets.
Pricing changes affect unit economics through ARPA and margin, and sometimes through churn. Guardrails help you avoid shipping discounts/pricing that break payback.
This calculator translates a target payback into a minimum ARPA (or maximum discount) given CAC and gross margin assumptions.
Prefer an explanation- Read the guide.
Pricing guardrails: payback-based minimum price and max discountARPA: how to calculate Average Revenue Per Account (formula + examples)CAC payback sensitivity: ARPA * margin scenarios (months to recover CAC)Cohort LTV forecasting: churn, expansion, discounting (practical model)
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Tip: you can type commas (e.g., 10,000).
Example
Using the default inputs, the result is:
$625.00
- Current ARPA (monthly)
- $800
- CAC
- $6,000
- Gross margin
- 80%
- Target payback (months)
- 12
How to calculate
- Enter CAC, gross margin, and a target payback.
- Compute required monthly gross profit and therefore minimum ARPA.
- Compare to current ARPA to compute max allowable discount.
Formula
Payback = CAC / (ARPAxmargin) - min ARPA = (CAC / payback) / margin; max discount = 1 - minARPA/currentARPA
- Payback is computed on gross profit (ARPA x gross margin).
- Ignores churn changes from pricing; validate with cohort data.
- Use segment-level ARPA/CAC for realistic guardrails.
FAQ
Is this the only pricing guardrail I should use-
No. Pair payback guardrails with retention risk (churn) and value perception. A discount can hit payback and still be bad if it changes customer quality or expansion potential.
Should I use contribution margin instead of gross margin-
If variable costs beyond COGS are meaningful, contribution margin is more conservative and usually better for payback guardrails.
Common mistakes
- Using revenue instead of gross profit for payback.
- Ignoring churn changes from pricing updates.
- Using blended ARPA across segments (hides price sensitivity).
Related calculators
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Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
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LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
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LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
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LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
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CAC Payback Period Calculator
Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.
Quick checks
- Keep time units consistent (monthly vs annual) across inputs and outputs.
- Segment by cohort/channel/plan before trusting a blended average.
- Use the related guide to avoid common definition and denominator mismatches.