Unit Economics Calculator — LTV, CAC and payback
Work out whether a customer earns you more than they cost, and how long you wait to get it back.
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Average across all customers (ARPU)
Share of customers who leave each month
Blended: all sales + marketing ÷ all customers
Revenue left after the cost of serving them
Result
Enter revenue, churn and CAC to see your numbers.
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What this calculates
LTV is what one customer is worth over their whole life with you: monthly revenue × gross margin ÷ churn rate. CAC is what it costs to win them. The ratio between the two tells you whether growth builds the business or drains it. Payback period is the other half of the story — a great ratio with a 20-month payback still starves a startup that only has 8 months of cash.
How to read your number
Above 3:1 is the range investors expect: you make back three times what a customer costs. Between 1:1 and 3:1 the model works but has no room — fix retention or acquisition cost before adding spend. Below 1:1 you lose money on every customer, and more marketing makes it worse. Churn is usually the lever founders underestimate. Halving churn doubles LTV; halving CAC only helps once.
Getting the inputs honest
Use blended CAC — total sales and marketing spend divided by every customer won, not just the ones from your best channel. Use gross margin, not revenue, or you will count money that goes straight back out in delivery costs. And measure churn over a month you actually observed, rather than the number you hope for.
Questions founders ask
What is a good LTV:CAC ratio?
3:1 or better is the common benchmark. Much higher can mean you are underspending on growth rather than that you are healthy.
Should I use revenue or gross margin?
Gross margin. Revenue overstates LTV by whatever it costs you to serve the customer — hosting, support, payment fees, delivery.
What if I do not know my churn yet?
Estimate from the customers you do have and mark it as an assumption. A number you can defend and revise beats a blank.
Why does payback period matter separately?
It is a cash question, not a profit question. A long payback can bankrupt a business whose ratio looks excellent on paper.
Every number here belongs on one page
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