How to use the unit economics calculator
Unit economics asks a simple question: after you pay to acquire a customer and serve them, how much is left? This calculator uses the contribution-margin LTV definition, so LTV is monthly contribution margin per customer × average lifetime, and the average lifetime is 1 ÷ monthly churn rate. A revenue-based LTV (order value × purchase frequency × lifetime) returns a very different number, so check which formula your team uses before comparing.
Monthly contribution margin subtracts only the costs that scale with each customer, such as COGS, payment processing fees and shipping. Fixed costs like rent and salaries are not subtracted here, so a positive margin does not by itself mean the company is profitable.
A churn rate of 0 would make the average lifetime infinite, so the field must be above 0. When the contribution margin is 0 or below, every extra customer deepens the loss, and LTV and CAC payback are not shown.
Frequently asked questions
Subscription businesses often treat 3x or higher as healthy, but the benchmark shifts with industry and growth stage. It works better as a comparison against your own prior quarters than as a pass or fail line.
No. Advertising buys new customers, so it belongs in the CAC field. Entering it in both places subtracts the same money twice.