Finance
~3 minutesUnit Economics Calculator
= 2.000.000 ₫
= 6.000.000 ₫
LTV / CAC ratio
- LTV
- 46,7M ₫
- Payback
- 4,3 months
- Customer lifetime
- 33,3 months
LTV/CAC is 3× or above — a sign of healthy unit economics. Keep an eye on the 4,3-month payback.
How this tool helps and the terms you need to know
When to use this tool
- When preparing data for capital calling documents.
- When you need a quick estimate before discussions with investors.
- When you need to answer the question “is the model already profitable on a per-customer basis?” in a fundraising package.
Basic calculation
Customer lifetime (months) = 100 ÷ Monthly churn rate (%) LTV = ARPU × Gross margin × Customer lifetime LTV / CAC ratio = LTV ÷ CAC CAC payback period (months) = CAC ÷ (ARPU × Gross margin)
Start by dividing 100 by the monthly churn rate to estimate how many months an average customer stays. Next, multiply the average monthly revenue per customer by the gross margin to get the gross profit actually earned each month, then multiply that by the number of months the customer stays to arrive at LTV. Finally, compare LTV against the cost of acquiring one customer to see how much each unit of spend returns, and divide the acquisition cost by the monthly gross profit to see how long it takes the business to recover that spend.
Example: A business earns an average of VND 2 million per customer per month at a 70% gross margin, spends VND 6 million to acquire one customer, and loses 3% of its customers each month. Customer lifetime is 100 ÷ 3, or roughly 33.3 months; monthly gross profit is VND 1.4 million; LTV is about VND 46.7 million; the LTV/CAC ratio is roughly 7.8x and the CAC payback period is about 4.3 months.
Terms used in this tool
- ARPUAverage revenue per user
- The average revenue collected from a single customer in one month. The simplest way to calculate it is to divide total recurring revenue for the month by the number of paying customers in that same month.
- Gross marginGross margin
- The percentage of revenue left after deducting the direct costs of serving customers, such as technology infrastructure, cost of goods sold and technical support. This is the portion that actually covers customer acquisition costs, so a low gross margin pulls LTV down very quickly.
- CACCustomer acquisition cost
- The average cost of winning one new customer, calculated as total marketing and sales spend in a period divided by the number of new customers gained in the same period. It must include sales team salaries, not just advertising spend.
- Churn rateMonthly churn rate
- The percentage of customers who stop using the service each month. The higher the churn, the shorter customers stay and the less value they return; 5% monthly churn corresponds to an average lifetime of 20 months.
- LTVLifetime value
- The total gross profit a customer generates over the entire time they stay with the business. This is the figure to compare directly against customer acquisition cost.
- CAC payback periodCAC payback period
- The number of months needed for the gross profit from one customer to cover the cost spent to acquire that customer. It shows how quickly capital cycles back; by convention, under 12 months is generally considered reasonable.
How to read the results
LTV / CAC below 1x
Each customer returns less than the amount spent to acquire them, which means the faster the business scales the larger the losses grow. Pricing, gross margin, acquisition cost or churn all need review before increasing scale.
Around 3x
The level regarded as healthy by industry convention: every unit of spend on acquiring a customer returns roughly three units of gross profit, enough to cover general operating costs and leave room for growth.
Above 5x
The model is highly efficient on a per-customer basis, though it may also signal that the business is spending too cautiously on customer acquisition and missing opportunities to expand market share.
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