What the SaaS Unit Economics Calculator does
This calculator turns acquisition spend, new customers, average revenue per account, gross margin and churn into the four numbers most SaaS unit-economics conversations rest on: customer acquisition cost (CAC), gross-margin lifetime value (LTV), the LTV:CAC ratio and CAC payback in months. Every formula is traced with your numbers, and a sensitivity grid shows how the ratio moves when churn and margin change.
It runs entirely in your browser; spend and revenue figures are never sent anywhere.
How to use it
- Enter fully loaded sales and marketing spend for a period and the number of new paying customers won in the same period.
- Enter ARPA per month, gross margin as a percentage, and monthly revenue churn. If you know annual churn, convert it: 20% a year is 1 - 0.8^(1/12), about 1.84% a month.
- Optionally cap the lifetime in months if churn is low and you do not want LTV to assume customers stay for decades.
- Read the ratio, payback and findings, then check the formula trace to see exactly how each figure was reached.
- Use the sensitivity grid to see which assumption the answer depends on most, and download the CSV.
Reading the results
LTV:CAC compares the gross margin a typical customer produces over their life with what it cost to win them. Below 1 the business loses money on each customer; 3:1 is a widely quoted convention for venture-style SaaS, not a rule.
Payback tells you how long cash is tied up in each new customer. A good ratio with a long payback can still starve a business of cash, because the margin arrives slowly.
LTV is extremely sensitive to churn: halving churn doubles it. If your churn figure comes from a few months of data, trust the payback figure more than the ratio.
Worked example: a sales-assisted B2B product
A team spends 60,000 in a quarter on sales and marketing and wins 40 customers, so CAC is 60,000 / 40 = 1,500. ARPA is 200 a month at 80% gross margin, so each customer contributes 160 of margin a month.
With 2% monthly revenue churn, LTV is 160 / 0.02 = 8,000 and LTV:CAC is 8,000 / 1,500 = 5.33. Payback is 1,500 / 160 = 9.4 months. Capping the lifetime at 36 months gives 160 x (1 - 0.98^36) / 0.02 = 4,134, and the ratio falls to 2.76 - the same business looks very different depending on how far ahead you are willing to count.
Formulas and scoring rules
- CAC
CAC = sales and marketing spend / new customers- Gross margin per month
margin = ARPA x gross margin- LTV (gross margin)
LTV = ARPA x gross margin / monthly churnEquivalent to margin x average lifetime, where lifetime = 1 / churn.- LTV with a lifetime cap
LTV_N = margin x (1 - (1 - churn)^N) / churnThe sum of margin over the first N months of a geometrically decaying cohort.- LTV:CAC
ratio = LTV / CAC- CAC payback
payback months = CAC / (ARPA x gross margin)Ignores churn during payback; the real payback of a cohort is a little longer.- Annual churn
annual = 1 - (1 - monthly)^12Compounded, not monthly x 12. Ratios and months are shown to 2 and 1 decimals.
Limitations: what the result does not prove
- It uses averages. Customers acquired through different channels usually have very different CAC and churn; blend them and a profitable channel can hide a loss-making one.
- Simple LTV assumes churn stays constant for ever and ignores expansion revenue and discounting of future cash. It is a comparison tool, not a valuation.
- CAC is only meaningful if spend and new customers are matched in time. With long sales cycles, lag the spend by the typical cycle length.
- Nothing here tells you whether the market can absorb more spend at the same CAC; acquisition costs usually rise as you scale a channel.
Privacy: where your data goes
Everything you paste, type or drop is processed in this browser tab. It is not uploaded, logged, stored or sent to analytics. Session recording and tag-manager scripts are switched off on this page.
Standards and sources
Frequently asked questions
What is a good LTV to CAC ratio?
Around 3:1 is the most quoted benchmark, but it is a convention from investors, not a law. A lower ratio can work with fast payback and cheap capital; a very high ratio can mean you are under-investing in growth.
How do I calculate CAC payback period?
Divide CAC by the monthly gross margin a customer produces, which is ARPA times gross margin. A CAC of 1,500 against 160 of monthly margin pays back in about 9.4 months.
Should LTV use revenue or gross margin?
Gross margin. Revenue-based LTV ignores the cost of serving the customer and can make an unprofitable product look healthy. This calculator always applies gross margin before comparing with CAC.
What costs belong in CAC?
Everything spent to win new customers in the period: advertising, marketing tools, events, content, and the salaries, commission and overheads of sales and marketing staff. Excluding salaries is the most common way CAC is understated.
Why cap customer lifetime in an LTV calculation?
With low churn the formula assumes customers stay for many years, which few businesses can prove. A cap of three to five years keeps LTV to a horizon you can defend, and the sensitivity grid shows how much the answer depends on it.
How do I convert annual churn to monthly churn?
Use 1 - (1 - annual)^(1/12), not annual divided by 12. For 20% annual churn that is about 1.84% a month. Dividing by 12 gives 1.67%, which overstates LTV.
Last reviewed by the A2Z.Tools team against the sources listed above.
