Unit economics answer the question underneath everything: does each customer make you money? This computes LTV, CAC, the ratio, and payback in plain English.
What this tool does
You enter revenue per customer, gross margin, churn, and acquisition cost; it computes lifetime value, the LTV:CAC ratio, and payback period.
Who it's for
Founders scaling acquisition who need to know whether spending more to grow is smart or self-harm.
How to use it — step by step
- Enter revenue and margin. What a customer pays and your gross margin on it.
- Enter churn. How fast customers leave — this drives lifetime value.
- Enter CAC. Fully loaded cost to acquire a customer.
- Read the ratio. LTV:CAC and payback, with what they mean.
How to read your result
A healthy business is roughly LTV:CAC of 3:1 or better with payback under ~12 months. Below 1:1, every new customer loses money — fix economics before you scale spend.
Worked examples
The same tool behaves differently depending on what you put in. Here are 3 situations.
Healthy 3:1
Inputs: Good margin, low churn, reasonable CAC.
What the tool shows: Ratio around 3:1 with sensible payback → economics support growth.
What to do: Scale acquisition with confidence.
Churn too high
Inputs: Customers leave fast.
What the tool shows: Low LTV drags the ratio down even with cheap CAC.
What to do: Fix retention before spending more on acquisition.
CAC too high
Inputs: Great product, expensive to sell.
What the tool shows: Long payback and a weak ratio.
What to do: Lower CAC or raise price/margin before scaling.
Common questions
What ratio is good? Around 3:1 LTV:CAC with payback under ~12 months.
Why does churn matter so much? It sets lifetime value — high churn quietly kills the ratio.
Below 1:1 — what now? Fix economics first; scaling only multiplies the loss.