Unit economics calculator

What it does

This unit economics calculator follows one customer through your business. It takes the monthly revenue per customer, subtracts every cost that grows with each customer, and gives you contribution per customer per month. From churn it works out how long a customer stays and their lifetime value. From your sales and marketing spend, new customers and onboarding cost it works out customer acquisition cost (CAC), then the LTV to CAC ratio, the months to pay back CAC, the most you could spend per customer at your target ratio, and how many customers you need to cover fixed costs. It runs in your browser.

How to use it

1. Pick a currency and enter average monthly revenue per customer.
2. Enter what it costs to serve one customer per month: hosting, support, other services and payment fees.
3. Enter monthly sales and marketing spend, new customers won and any onboarding cost per new customer.
4. Enter monthly churn, your fixed costs and the LTV to CAC ratio you are aiming for.
5. Read the results and copy the summary.

How to read the result

In the example a customer pays 60 a month. Serving them costs 4 in hosting, 6 in support, 2 in other services and 3% payment fees, which is 1.80. That leaves a contribution of 60 − 13.80 = 46.20 a month, a 77% contribution margin.

At 3% monthly churn the average customer stays 1 ÷ 0.03 = 33.3 months, so lifetime value is 46.20 ÷ 0.03 = 1,540. Sales and marketing spend of 24,000 brings in 60 customers, 400 each, and onboarding adds 50, so CAC is 450. The ratio is 1,540 ÷ 450 = 3.42 to 1 and payback is 450 ÷ 46.20 = 9.7 months. At a target of 3 to 1, you could spend up to about 513 per customer.

Fixed costs of 30,000 a month need 30,000 ÷ 46.20 = 650 customers to cover them. That is the number that tells you whether the business can work at its current size: a good ratio with too few customers still loses money.

The formulas:

• Contribution = revenue per customer − variable costs per customer
• LTV = contribution ÷ monthly churn
• CAC = sales and marketing spend ÷ new customers + onboarding cost
• Payback = CAC ÷ contribution

Every input is an average, and churn is assumed to be steady. If more customers leave in their first months than later, the averages flatter you, so check this month's figures against what actually happened to customers who joined a year ago. For CAC by channel, use the CAC calculator; for a simpler lifetime value check, the LTV calculator.

Support and hosting costs per customer are often set by how the product is built. Our web app development service looks at both when planning a SaaS build.