Unit Economics Calculation

Format: Calculate the key economic metrics for your product.

Core formulas:

CAC (Customer Acquisition Cost) = Marketing spend / New customers
LTV (Customer Lifetime Value) = Average monthly revenue x Average retention months
LTV/CAC ratio:
  < 1: Losing money (unsustainable)
  1-3: Barely sustaining
  > 3: Healthy (for every $1 spent on acquisition, you eventually earn $3+)

Exercise: Assume you built a SaaS product at $9.99/month:

• Monthly ad budget $500, bringing 50 sign-ups
• 10% of them convert to paid users
• Average user churns after 8 months

Calculate: CAC = ? LTV = ? LTV/CAC = ? Is it sustainable?