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Unit Economics Calculator

Model CAC, payback, LTV, and LTV:CAC together from ARPA, gross margin, and churn.

Unit economics connect acquisition cost (CAC) to profitability over time (LTV) and cash efficiency (payback). This calculator models them together using consistent units.

Use it by segment (channel, plan, geo) rather than relying on a single blended average.

Prefer an explanation- Read the guide.
Related definitions:unit economicscaccac payback periodltvltv to cacgross marginchurn ratecustomer lifetime
Unit economics: CAC, payback, LTV, and LTV:CAC (how to model them)Unit economics hub: CAC, LTV, payback, and runway (a practical stack)LTV:CAC ratio: how to interpret the ratio (and avoid mistakes)Gross margin improvements: how margin changes LTV, payback, and growth ability
 
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Tip: you can type commas (e.g., 10,000).

Example

Using the default inputs, the result is:
5 months
ARPA (monthly)
$200
Gross margin
80%
Monthly churn rate
3%
CAC (per new customer/account)
$800

How to calculate

  1. Enter ARPA (monthly revenue per account) and gross margin (%).
  2. Enter monthly churn (%). This approximates customer lifetime (1 / churn).
  3. Enter CAC per new customer/account.
  4. Review payback months, LTV (gross profit), and LTV:CAC ratio.

Formula

Payback = CAC / (ARPA x gross margin); LTV ~ (ARPA x gross margin) / churn; LTV:CAC = LTV / CAC
  • Uses a simple constant-churn model (lifetime ~ 1 / churn).
  • LTV is modeled as gross profit (revenue x gross margin) to align with CAC.

Benchmarks

  • Many SaaS teams target LTV:CAC around ~3:1 as a rough rule of thumb (varies by stage and cash constraints).
  • Shorter payback is usually safer for cash efficiency; acceptable payback depends on burn and retention.

FAQ

Should LTV be revenue or gross profit-
For unit economics, LTV should usually be based on gross profit so it reflects the value created after COGS. If you use revenue LTV, label it clearly and be consistent when comparing to CAC.
Why does this use monthly churn-
Because ARPA is monthly in this model. Time units must match: monthly ARPA uses monthly churn. If you prefer annual units, convert both ARPA and churn consistently.

Common mistakes

  • Mixing revenue-based LTV with fully-loaded CAC (mismatched bases).
  • Using annual churn with monthly ARPA (unit mismatch).
  • Ignoring segment differences (SMB vs enterprise behaves differently).

Related calculators

SaaS Metrics
CAC Calculator
Calculate Customer Acquisition Cost (CAC) from total acquisition spend and new customers.
SaaS Metrics
Fully-loaded CAC Calculator
Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
SaaS Metrics
LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
SaaS Metrics
LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
SaaS Metrics
LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
SaaS Metrics
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.