Growth & Acquisition Decision Lab

Unit Economics & LTV / CAC Cohort Lab

Calculate Customer Acquisition Cost (CAC), Lifetime Value (LTV), CAC payback speed, and simulate 12-month cohort retention waterfalls to evaluate commercial sustainability.

Unit Economics Model Cohort Waterfall LTV & CAC Rules FAQ

Industry Model Presets

Load calibrated unit economics profiles across tech, retail, and service businesses.

Step 1: Acquisition & Retention Inputs

Acquisition Spend, ARPU & Churn Assumptions

$
Ad spend, sales commissions, and promotion.
Gross new paying customers from spend.
$
Average monthly recurring revenue per user.
%
Direct service or fulfillment margin after COGS.
%
Percentage of customers canceling each month.
Customer Acquisition Cost (CAC)
$0.00
Customer Lifetime Value (LTV)
$0.00
LTV to CAC Ratio
0.00x
CAC Payback Speed
0.0 mos
Average Lifespan
0.0 mos
Net Lifetime Profit / User
+$0.00

Step 2: Multi-Month Cash Flow Recovery

12-Month Cohort Retention & Payback Waterfall

Tracks the financial lifecycle of the acquired cohort over 12 months. Shows customer retention decay, monthly gross contribution, and cumulative net cash recovery.

Cohort Month Active Customers Cohort Revenue Gross Profit ($) Cumulative Net Profit Payback Status

Unit Economics Guide

Understanding LTV, CAC & payback dynamics

Unit economics determine whether scaling sales and marketing creates shareholder value or accelerates cash burn.

  • The 3x LTV:CAC Golden Rule: An LTV:CAC below 3.0x leaves insufficient gross contribution to support general overhead, product development, and working capital.
  • Payback Speed Matters: A 6-month CAC payback allows rapid cash reinvestment, while a 24-month payback strains working capital even if theoretical LTV is high.
  • Churn Compounding: Reducing monthly churn from 5% to 3% nearly doubles customer lifespan from 20 months to 33.3 months.

Explore full business cash flows in the 12-Month Pro-Forma Financial Model Generator or test pricing sensitivity in the Pricing Strategy Simulator.

Standard Formulas

Unit economics formulas

CAC = Total Acquisition Spend ÷ New Customers Acquired

Customer Lifespan (Months) = 1 ÷ (Monthly Churn % ÷ 100)

LTV (Gross Profit) = (ARPU × Gross Margin %) ÷ (Monthly Churn % ÷ 100)

LTV:CAC Ratio = LTV ÷ CAC

CAC Payback (Months) = CAC ÷ (ARPU × Gross Margin %)

Test customer retention and marketing decisions in the Fitness Studio Simulator and Food Truck Simulator.

FAQ

Unit economics and LTV questions

How is Customer Lifetime Value (LTV) calculated?

LTV equals the average monthly contribution margin per customer divided by the monthly customer churn rate. Monthly contribution margin is Average Revenue Per User (ARPU) multiplied by the gross margin percentage.

What is a healthy LTV to CAC ratio?

A standard benchmark for sustainable businesses is an LTV:CAC ratio of 3.0x or higher. A ratio below 1.0x loses money on every acquired customer, while ratios above 5.0x often indicate under-investment in growth channels.

What is the CAC Payback Period?

CAC Payback Period is the number of months required for the gross profit generated by a customer to fully repay the upfront sales and marketing costs spent to acquire them.

What does a 12-month cohort retention waterfall show?

A cohort waterfall tracks a specific group of customers acquired in the same month over time, illustrating customer decay due to churn, recurring revenue generation, and cumulative cash flow payback.

Can I export the cohort data to CSV?

Yes. You can export the complete unit economics summary and 12-month cohort waterfall to a UTF-8 CSV spreadsheet with formula injection defense or print an executive summary.

Are these calculations formal investment advice?

No. This tool provides simplified educational models to demonstrate unit economics mechanics without financing friction, seasonal expansion, viral loops, or overhead variations.

Continue Exploring Business Decision Tools

Explore our Marketing & Customer Demand Games Hub, analyze multi-product break-even in the Break-Even Matrix Lab, simulate price elasticity in the Pricing Strategy Simulator, or generate pro-forma forecasts in the Financial Model Generator.