Calculate CAC, LTV, ARPU and margins to evaluate your business model.
Metrics summary
| Margin per unit | |
| Margin rate (calculated) | |
| LTV (revenue) | |
| LTV (with margin) | |
| LTV / CAC | |
| ROI per customer | |
| Profit per customer | |
| Break-even point |
Fill in the fields to calculate unit economics
Unit Economics — business profitability analysis at the level of a single customer or transaction. Helps understand whether acquiring each customer pays off.
Margin per unit — the difference between price and cost of goods sold (COGS). Shows how much you earn per sale before acquisition costs.
LTV (Lifetime Value) — total revenue (or profit) from a single customer over the entire relationship.
CAC (Customer Acquisition Cost) — cost of acquiring one customer. Includes advertising, marketing, and sales.
ROI per customer — shows how much profit a customer brings relative to acquisition costs. Formula: (LTV with margin - CAC) / CAC x 100%.
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Open AI chat →Free Unit Economics Calculator: Compute LTV, CAC, ROI and Margins Online
This free unit economics calculator lets you compute key business metrics — LTV, CAC, ARPU, margin, and ROI — in seconds. Enter your numbers to determine whether your business model is fundamentally profitable at the per-customer level.
What is unit economics
Unit economics analyzes revenues and costs at the level of a single "unit" — typically a customer, order, transaction, or subscription, depending on the business model. The goal is to determine whether the business model is fundamentally profitable before accounting for fixed overhead costs.
If a unit is unprofitable, scaling only accelerates losses. Positive unit economics is a prerequisite for sustainable growth.
Key metrics
| Metric | Formula | What it shows |
|---|---|---|
| CAC | Marketing + Sales cost / New customers | Customer acquisition cost |
| LTV | AOV × Frequency × Lifespan | Customer lifetime value |
| LTV/CAC | LTV / CAC | Acquisition payback ratio (target ≥ 3) |
| Gross Margin | (Revenue − Variable costs) / Revenue | Unit-level profitability |
| Contribution Margin | Revenue − Variable costs − CAC | Unit contribution to fixed cost coverage |
| Churn Rate | Lost customers / Starting customers | Customer attrition rate |
| Payback Period | CAC / (Monthly revenue × Margin) | Months to recover CAC |
Unit economics calculation framework
- Define your unit (customer, order, subscription)
- Calculate CAC: total acquisition spend / units acquired
- Calculate LTV adjusted for margin and churn
- Compute Contribution Margin = LTV − CAC
- Calculate CAC Payback Period
- Determine how much Contribution Margin covers fixed costs
Healthy business: Contribution Margin > 0, LTV/CAC ≥ 3, Payback Period ≤ 12 months.
By business model
| Model | Unit | Key metrics |
|---|---|---|
| E-commerce | Order | Order margin, repeat purchase rate, return cost |
| SaaS | Subscriber | MRR, Churn, CAC, LTV, NRR |
| Marketplace | Transaction | GMV, take rate, transaction cost |
| Services | Project/client | Hourly rate, utilization, project margin |
| Mobile app | User | ARPU, ARPPU, Retention, ROAS |
FAQ
What LTV/CAC ratio is healthy?
LTV/CAC ≥ 3 is the standard benchmark. Early-stage SaaS with long sales cycles may accept 2–3x while scaling. E-commerce businesses with fast transactions typically target 4–5x+.
How do I calculate CAC correctly?
Include all acquisition costs: ad spend, prorated marketing and sales team salaries, tools and subscriptions, agency fees. Dividing only ad spend by customers significantly understates your true CAC.
Can you scale with negative unit economics?
Rarely — only with a clear, credible path to positive unit economics at scale (unit cost reduction from volume, LTV improvement through upsells). Without that path, it's simply burning cash.
See also: LTV calculator, ROI calculator, A/B test calculator.
Useful articles
LTV: How to Calculate Customer Lifetime Value
What LTV is, how to calculate it using different methods, and why it's a key metric for making business decisions.
CPM, CPC, and CPA: Online Advertising Payment Models
A detailed breakdown of online advertising payment models: CPM, CPC, and CPA. Calculation formulas, real-world examples, and recommendations for choosing the right model for different goals.