Free SaaS unit economics calculator

LTV, CAC, and payback calculator

Estimate whether customer gross profit can recover acquisition spending under explicit churn assumptions.

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LTV:CAC ratio3.20×Healthy: commonly cited target is 3× or more
Customer value vs. cost to acquire
  • Lifetime value$1,600
  • Acquisition cost$500
CAC payback6.3 months
Estimated lifetime20.0 months
Monthly gross profit / customer$80
Annual gross profit / customer$960

Simplified formula that assumes stable churn, ARPA and margin. Cohort-based LTV is better when retention changes with customer age or segment.

Frequently asked

What costs should be included in CAC?

Include the sales and marketing costs required to acquire the measured customers, such as payroll, contractors, advertising, commissions, and directly related tools.

Why does this calculator use gross margin?

Revenue is not all available to recover acquisition cost. Applying gross margin estimates the contribution remaining after direct delivery costs.

Why is LTV unavailable when churn is zero?

The simplified lifetime formula divides one by churn. A zero observed churn rate does not prove infinite lifetime, especially for a small or young cohort.

When should I use cohort-based LTV?

Use cohorts when retention changes materially with customer age, plan, channel, or segment. Cohort cash flows are more reliable than a constant-churn shortcut.

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The simplified formulas

CAC equals sales and marketing spend divided by newly acquired customers. Estimated customer lifetime equals one divided by monthly logo churn. LTV then multiplies monthly average revenue per account by gross margin and estimated lifetime.

CAC payback divides CAC by monthly gross profit per customer. Use the same acquisition period and attribution policy for spending and customers; otherwise the denominator can make acquisition look artificially efficient.

Where the shortcut breaks

Constant churn assumes every customer has the same cancellation probability every month. Real retention often falls sharply during onboarding and stabilizes later. Expansion, contraction, annual plans, reactivation, and customer-size differences also change actual value. Mature teams should calculate discounted cohort contribution margin rather than relying only on the shortcut.

Use unit economics as a decision system

Compare results by channel, plan, geography, and customer segment. A blended ratio can hide one profitable channel subsidizing another. Track payback alongside cash runway: even attractive lifetime economics can create a financing problem when acquisition spending is paid long before gross profit arrives.

Sources and further reading