Calculate CAC, LTV, gross margin, contribution margin, payback period and break-even customers. Test pricing, churn and acquisition improvements before scaling spend.
Unit economics measures whether one customer creates enough gross profit and contribution to recover acquisition cost and support the operating model. Strong founders track CAC, margin, churn, payback and LTV by customer segment and acquisition channel rather than relying only on revenue growth.
Measure how much sales and marketing spend is required to add one new customer.
Estimate the margin generated over the expected customer relationship.
Calculate how many months of contribution are needed to recover acquisition cost.
Estimate how many active customers are required to cover monthly fixed operating costs.
CAC is calculated by dividing sales and marketing spend for a defined period by the number of new customers acquired during the same period.
The tool uses a simplified recurring-revenue method: monthly customer contribution multiplied by estimated customer lifetime. Lifetime is estimated as one divided by monthly churn.
A very high ratio can indicate strong economics, but it can also indicate that the business is underinvesting in acquisition. The real question is whether growth remains efficient as spending increases.
Share your business stage and we will help you understand the registration, GST, license, accounting, payroll, and compliance requirements.