Unit economics is the fundamental building block of business profitability. We use the following formulas to analyze your performance:
Calculated by dividing the total marketing and sales spend by the number of new customers acquired during the same period.
$$CAC = \frac{\text{Total Marketing Spend}}{\text{New Customers Acquired}}$$
The total net profit a customer generates over their entire relationship with your company. We include Gross Margin for a more accurate financial picture.
$$LTV = ARPU \times \text{Customer Lifetime} \times \text{Gross Margin}$$
Where Customer Lifetime is calculated as $$1 / \text{Churn Rate}$$.
The number of months required for a customer to generate enough gross profit to cover their acquisition cost.
$$Payback Period = \frac{CAC}{ARPU \times \text{Gross Margin}}$$
A 3:1 LTV/CAC ratio is widely considered the benchmark for a healthy, scalable business model.
Calculate your Customer Acquisition Cost (CAC) and Lifetime Value (LTV) to measure business health and unit economics accurately.
Results are estimates based on standard models. Please verify critical data before taking action. Terms of Use
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