Unit Economics Calculator: CAC, LTV, Payback (Template)

The short answer

Unit economics show whether a single customer makes or costs you money. Four numbers are enough: CAC (what a new customer costs), LTV (what they bring in overall), the LTV to CAC ratio and payback (how many months until the cost is earned back).

Template to download: All the calculations in this article are available as an Excel file with example figures and a sensitivity table. Download the unit economics calculator (Excel)

The formulas

CAC = (marketing costs + sales costs) divided by the number of new customers in the same period.
Gross profit per customer per month = monthly revenue per customer times gross margin.
LTV = monthly gross profit divided by the monthly churn rate.
LTV to CAC = LTV divided by CAC.
Payback in months = CAC divided by monthly gross profit.

An example with invented figures

A software company spends 20,000 euros a month on marketing and 30,000 euros on sales and wins 25 new customers. Each customer pays 400 euros a month, gross margin is 80 percent and 2 percent of customers cancel every month.

CAC: 50,000 euros divided by 25 customers = 2,000 euros.
Gross profit: 400 euros times 80 percent = 320 euros a month.
Customer lifetime: 1 divided by 2 percent = 50 months.
LTV: 320 euros divided by 2 percent = 16,000 euros.
LTV to CAC: 16,000 divided by 2,000 = 8.
Payback: 2,000 euros divided by 320 euros = about 6.3 months.

The figures are invented. They show how the calculation works, not what is typical in your industry.

How do you read the results?

As a rule of thumb, an LTV to CAC ratio of about 3 or more is considered healthy. Below 1, every new customer loses money. A very high ratio can mean you are under-investing in growth. For software, a payback under 12 months is often a good sign. What matters is the link to your cash: the longer the payback, the more money is tied up before it flows back. How long your funds last is covered in How to calculate your runway, and how efficiently you turn money into growth in burn multiple and Rule of 40.

Churn is the biggest lever

The sensitivity table in the template shows it: if monthly churn rises from 2 to 5 percent, LTV in the example falls to less than half. Small improvements in cancellations beat cutting customer costs by the same percentage. So first check why customers leave.

What the template does not cover

Varying churn rates. New customers often cancel more than long-standing ones.
Growing revenue per customer. Upsells increase LTV.
Discounting. Future income is worth less than income today.
Cost allocation. You decide which salaries count as sales. Stay consistent.

Frequently asked questions

What is CAC?

CAC stands for customer acquisition cost: what it costs to win a new customer. Divide marketing and sales costs for a period by the number of new customers in the same period.

How do I calculate LTV?

LTV is the value of a customer over the whole relationship. In its simplest form: monthly gross profit per customer divided by the monthly churn rate.

What is a good LTV to CAC ratio?

As a rule of thumb a ratio of about 3 or more is considered healthy. Below 1, every new customer loses money. Values depend on industry and stage.

What does payback mean?

Payback is the number of months until a customer's gross profit has earned back the cost of winning them. For software, under 12 months is often considered good.

Does the template replace financial advice?

No. The template is a simplified model with a constant churn rate and no discounting.

Sources and status

The article describes the method; all example figures are invented. The thresholds quoted are common rules of thumb, not fixed rules. It does not replace financial advice. As of October 2026.