Runway 200

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Unit economics calculator: LTV, CAC and payback period

Customer lifetime value (LTV)$640
LTV ÷ CAC4.3
Payback period4.7 months
Average customer lifetime20 months
Customer ceiling400 customers
Monthly revenue ceiling$16,000
A healthy ratio: a customer brings in at least three times what they cost. Spending on acquisition makes sense.
CAC
LTV

How the calculator works

  • LTV — how much a customer brings in over the whole time they pay: monthly margin per customer divided by monthly churn.
  • LTV ÷ CAC — how many times more a customer brings in than they cost to win. Aim for three or more.
  • Payback period — how many months of margin it takes to earn back the CAC. If the average customer leaves sooner, they never pay back.
  • Average customer lifetime — one divided by monthly churn: at 5% churn a customer pays for 20 months on average.
  • Customer ceiling — monthly inflow divided by churn. The base won't grow past it however long you wait: as many customers leave as arrive.
LTV = price × margin ÷ churn

Where to get the numbers

  • Price — the average monthly payment per customer, after discounts.
  • Margin — what's left of the price after the direct cost of serving the customer: servers, support, payment fees. Usually 70–90% for online services.
  • Churn — the share of paying customers lost in a month. If you track weekly churn, multiply by about four.
  • CAC — marketing and sales spend for a month divided by new paying customers in the same month.

What the calculator leaves out

The LTV formula assumes churn is constant. In reality new customers leave faster, and those who survive the first months stay much longer — so with your first three customers any division gives a pretty number and no knowledge. Look at cohorts once you have at least a few dozen customers.

More in Unit economics in plain words and the glossary.

Test it on your own decisions

In Runway 200 LTV and CAC aren't set with a slider — they come out of your decisions: price, channels, product quality and the segment you pick. The first ten weeks are free, no sign-up.