# Unit Economics Calculator

**What this is:** A structured worksheet for calculating the key unit economics metrics for a business — primarily designed for SaaS and subscription businesses, with notes for e-commerce and services adaptations.  
**Use for:** Fundraising, investor discussions, pricing decisions, growth planning, and any conversation about whether a business's customer acquisition model is healthy.  
**Note:** The Excel version includes formula-driven cells, sensitivity tables, and visual payback-period charts.

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## Core unit economics vocabulary

| Term | Definition | Healthy benchmark (SaaS) |
|---|---|---|
| **CAC** (Customer Acquisition Cost) | Total sales & marketing spend ÷ new customers acquired | Varies by segment; monitor the ratio |
| **LTV** (Customer Lifetime Value) | Average revenue per customer × gross margin % ÷ churn rate | LTV:CAC > 3x |
| **LTV:CAC ratio** | Lifetime value divided by acquisition cost | > 3x is the standard threshold |
| **CAC payback period** | CAC ÷ monthly gross profit per customer | < 12 months (consumer); < 18–24 months (enterprise) |
| **Churn rate** | % of customers (or revenue) lost per period | < 5% annual (enterprise SaaS); varies widely |
| **NRR** (Net Revenue Retention) | Remaining + expansion revenue from prior cohort ÷ prior cohort revenue | > 100% = growing without new customers |
| **Gross margin** | (Revenue − COGS) ÷ Revenue | 65–80%+ (SaaS); 30–50% (services) |

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## Company: _______________ | Period: _______________ | Segment: _______________

*(Run this calculator per customer segment or cohort if segments differ significantly)*

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## Section 1: Revenue per Customer

| Input | Value | Notes |
|---|---|---|
| Average contract value (ACV) or MRR per customer | $ ___ | Annual for annual contracts; monthly × 12 for MRR businesses |
| Average customer lifespan (months) | ___ months | = 1 ÷ monthly churn rate × 12 for annualized |
| Monthly churn rate | ___%  | Or annual churn rate ÷ 12 |
| Annual churn rate | ___% | Monthly × 12 (approximate) |
| Gross margin % | ___% | (Revenue − direct COGS) ÷ Revenue |

**Calculation — LTV**

```
LTV = (ACV or MRR × 12) × Gross Margin % ÷ Annual Churn Rate

LTV = $___ × ___% ÷ ___% = $ ___
```

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## Section 2: Customer Acquisition Cost (CAC)

| Input | Value | Notes |
|---|---|---|
| Total sales & marketing spend (period) | $ ___ | Salaries, commissions, ads, events, tools |
| New customers acquired (same period) | ___ | Customers from paid and organic — be consistent |
| Blended CAC | $ ___ | Spend ÷ customers acquired |

**Paid vs organic split (optional but valuable):**

| Channel | Spend | New customers | CAC |
|---|---|---|---|
| Paid / outbound | | | |
| Organic / inbound | | | |
| Channel / partner | | | |
| **Blended** | | | **$___** |

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## Section 3: Core Ratios

| Metric | Your number | Benchmark | Status |
|---|---|---|---|
| **LTV:CAC ratio** | ___ x | > 3x | ☐ Healthy  ☐ Watch  ☐ Concern |
| **CAC payback period** | ___ months | < 12–18 mo | ☐ Healthy  ☐ Watch  ☐ Concern |
| **Monthly churn** | ___% | < 1–2% (SaaS) | ☐ Healthy  ☐ Watch  ☐ Concern |
| **Gross margin** | ___% | 65–80%+ (SaaS) | ☐ Healthy  ☐ Watch  ☐ Concern |
| **NRR** | ___% | > 100% | ☐ Healthy  ☐ Watch  ☐ Concern |

**LTV:CAC calculation:**

```
LTV:CAC = $LTV ÷ $CAC = $___ ÷ $___ = ___ x
```

**CAC payback period:**

```
Payback = CAC ÷ (Monthly ACV × Gross Margin %)
Payback = $___ ÷ ($___/12 × ___%) = ___ months
```

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## Section 4: Sensitivity Analysis

*How do the ratios change if key inputs shift?*

### LTV:CAC sensitivity — Churn rate

| Annual churn rate | LTV | LTV:CAC |
|---|---|---|
| ___% (current) | | |
| ___% (optimistic, −2pp) | | |
| ___% (pessimistic, +2pp) | | |

### LTV:CAC sensitivity — CAC

| CAC scenario | CAC | LTV:CAC |
|---|---|---|
| Current | | |
| −20% (efficiency improvement) | | |
| +20% (market gets more competitive) | | |

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## Section 5: E-commerce / DTC Adaptation

*For e-commerce businesses, unit economics work differently — repeat purchase probability replaces subscription churn.*

| Input | Value |
|---|---|
| Average Order Value (AOV) | $ ___ |
| COGS + fulfillment + shipping + payment per order | $ ___ |
| **Contribution margin per order** | $ ___ |
| Expected number of orders per customer (lifetime) | ___ |
| **LTV** = Contribution margin × expected orders | $ ___ |
| CAC | $ ___ |
| **LTV:CAC** | ___ x |
| **Payback period** = CAC ÷ contribution margin per order | ___ orders / ___ months |

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## Section 6: Interpretation

**What the numbers tell us:**

| Finding | Implication |
|---|---|
| LTV:CAC < 1 | Losing money on every customer acquired — not viable without significant change |
| LTV:CAC 1–3x | Marginal — profitable at unit level but leaves little room for overhead or growth investment |
| LTV:CAC 3–5x | Healthy — strong enough to invest in growth; watch payback period |
| LTV:CAC > 5x | Potentially under-investing in growth — consider whether CAC could be higher with proportionally better returns |
| Payback > 24 months | High capital intensity — need significant upfront financing to fund growth |
| NRR > 110% | Expansion revenue exceeds churn — compounding growth engine |

**Our key takeaway:**

_______________

**What changes would most improve our unit economics?**

1. _______________
2. _______________

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*Covered in the FinOps & Unit Economics Guide on biztechprimer.com.*