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SaaS Unit Economics Calculator

Churn, LTV, CAC, payback, NRR and runway from one set of inputs: change churn by a point and watch every metric, the valuation and your cash runway move.

Updated · By Niraj Kumar · 3 sources

Revenue and customers

$

ARPU $100 a month.

Retention

%
0%15%

Customers who cancel each month. 2% a month is 22% a year.

%
−2%5%

Upgrades and added seats less downgrades, from customers who stay. Gives NRR of 92%.

Margin and acquisition

%
0%100%

Revenue left after hosting, support, payment fees and third-party APIs.

$

Ads, tools and the pay of sales and marketing staff. CAC $733.

Cash

$
$

R&D, G&A, rent: everything outside cost of revenue and sales and marketing.

LTV settings

%

What future profit is worth today. 0 for an undiscounted LTV.

months

How long a customer's profit counts. 60 is common.

LTV:CAC4.2:1LTV $3,091 · CAC $733 · payback 9.4 months
Customer lifetime value
$3,091
60 months, discounted 10%; simple LTV $3,900
CAC
$733
$22,000 ÷ 30 new customers
LTV:CAC
4.2:1
Healthy, at or above 3:1
CAC payback
9.4 months
Under 12 months: efficient
Net revenue retention
92%
Gross retention 78%; 22% of customers lost a year
Implied valuation
$2,457,000
3.4× ARR on 49% growth; Rule of 40: 16
Cash runway
Default alive
Burning $20,200 a month; profitable in month 11, before the cash runs out
What if you pulled one lever?Each row changes one input and leaves the rest as entered. Valuation moves in steps as growth, churn and NRR cross a band.
ChangeLTVLTV:CACPaybackValuationBreak-even
As entered$3,0914.2:19.4 months$2,457,000Month 11
Cut monthly churn by 1 point+$953+1.30–+$1,053,000−2 mo
Add 0.5 points of monthly expansion+$417+0.57––−1 mo
Acquire customers 10% cheaper–+0.47−0.9 mo–−1 mo
Raise gross margin by 5 points+$198+0.27−0.6 mo+$63,000−2 mo
One customer: gross profit less CACCAC not yet earned backProfit after CAC
-$750-$500-$250$0$250$500Payback, month 9.703691215

Expected profit from a new customer, allowing for the chance they churn and for expansion. Simple payback ignores churn: 9.4 months.

Cash in the bank, month by monthShort of cashCash in the bank
$0$250,000$500,000$750,000$1,000,000$1,250,000061218243036

Burning $20,200 a month; profitable in month 11, before the cash runs out. New customers join at today's ARPU; costs stay flat.

Against SMB SaaS benchmarksSmall-business customers, contracts under about $5,000 a year. Checked October 11, 2026.
MetricYoursMedianStrongWhere you sit
Monthly churn2%2%1%Above median
Net revenue retention92%92%102%Above median
Gross margin78%75%82%Above median
CAC payback9.4 months12.0 months8.0 monthsAbove median

How are SaaS unit economics calculated?

Divide sales and marketing spend by new customers for CAC, then compare it with a customer's lifetime gross profit (LTV). Aim for LTV:CAC of at least 3:1 and payback inside 12 to 18 months. The SMB example here has LTV:CAC of 4.2:1 and payback in 9.4 months.

Every figure comes from one set of inputs, so a change to churn, expansion, margin or acquisition spend moves LTV, LTV:CAC, payback, valuation and runway together. The full LTV adds up a customer's gross profit month by month, shrunk by churn, grown by expansion and discounted to today, over a fixed horizon so it stays finite. The simple LTV is the textbook ARPU × margin ÷ churn.

ARPU = MRR ÷ customers; gross profit per customer g = ARPU × gross margin; annual churn = 1 − (1 − c)^12; NRR = ((1 − c) × (1 + e))^12; GRR = (1 − c)^12; simple LTV = g ÷ c; LTV = Σ g × q^t for t = 0 … H − 1, q = (1 − c)(1 + e) ÷ (1 + d)^(1/12); CAC = sales and marketing ÷ new customers; payback = CAC ÷ g; LTV:CAC = LTV ÷ CAC; cash(t+1) = cash(t) + MRR(t) × margin − sales and marketing − other costs; runway = months until cash < 0
c
Monthly logo churn: the share of customers who cancel each month
e
Monthly net expansion from customers who stay: upgrades and seats less downgrades
d
Annual discount rate
H
LTV horizon in months
NRR
Net revenue retention: this year's revenue from last year's customers, with expansion
GRR
Gross revenue retention: the same before expansion, at most 100%
CAC
Customer acquisition cost: sales and marketing spend per new customer
Rule of 40
Annual growth plus operating margin, in percent
SaaS benchmarks by segment: median and strong (checked October 11, 2026)
SegmentMonthly churnNRRGross marginCAC payback
SMB SaaS2% (1%)92% (102%)75% (82%)12 mo (8)
Mid-market SaaS1.2% (0.7%)102% (111%)77% (82%)18 mo (12)
Enterprise SaaS0.7% (0.4%)110% (120%)75% (80%)24 mo (16)
Product-led (PLG)3% (1.5%)90% (102%)80% (85%)6 mo (3)
Vertical SaaS1.2% (0.7%)100% (108%)70% (78%)15 mo (10)
Early stage (under $1M ARR)3% (1.5%)88% (100%)70% (80%)15 mo (9)

Worked example

An SMB SaaS on $60,000 MRR from 600 customers at $100 a month, adding 30 a month on $22,000 of sales and marketing, with 2% monthly churn, 1.3% monthly expansion, 78% gross margin, $45,000 of other monthly costs and $600,000 in the bank.

  1. 1ARPU: $60,000 ÷ 600 = $100; gross profit $78 a month at 78%
  2. 2Retention: 2% churn and 1.3% expansion a month give NRR 92% and GRR 78%
  3. 3LTV over 60 months at 10% discount: $3,091 (simple: $3,900)
  4. 4CAC: $22,000 ÷ 30 = $733; payback 9.4 months
  5. 5LTV:CAC: 4.2:1, healthy, at or above 3:1
  6. 6Cash: burning $20,200 a month on $600,000; runway default alive, break-even in month 11

LTV:CAC 4.2:1, payback 9.4 months, NRR 92%, growing 49% a year: about $2,457,000 at 3.4× ARR.

Frequently asked questions

What is a good LTV:CAC ratio for SaaS?

3:1 or better is the usual benchmark: each customer returns three times what it cost to win, in gross profit. Below 1:1 you lose money on every customer. Well above 5:1 often means you are under-investing in growth and could spend more to acquire customers faster. See the LTV:CAC ratio calculator.

How much does cutting churn by 1% change LTV?

More than most levers. In the SMB example, churn falling from 2% to 1% a month lifts LTV from $3,091 to $4,045 and LTV:CAC from 4.2:1 to 5.5:1, because churn sits in the denominator. The what-if table above runs the same test on your figures.

What is a good CAC payback period?

Under 12 months is efficient and the target most investors quote for SMB and self-serve SaaS. 12 to 18 months is typical for mid-market, and enterprise companies with large contracts often run 18 to 24. Beyond 24 months the business needs a lot of cash to grow. See the CAC payback period calculator.

Should CAC include salaries?

Yes, for a fully loaded CAC: the pay of sales and marketing staff, their tools and agencies as well as ad spend. Paid-only CAC, counting just ads, flatters the ratio and is useful for comparing channels, not for judging the business. Leave out onboarding and support after the sale; those belong in cost of revenue, which lowers gross margin.

Why does my LTV differ from the simple formula?

The simple formula, ARPU × gross margin ÷ churn, assumes customers stay for 1 ÷ churn months on average, never expand and that a dollar in five years is worth a dollar today. The full LTV here adds expansion, discounts future profit and stops at a horizon, 60 months by default. With low churn the simple figure can be several times larger, which is why investors discount it.

Is logo churn or revenue churn the right one to enter?

Logo churn, the share of customers who cancel, in the churn field, and downgrades netted against upgrades in the expansion field. The engine then derives revenue retention from the two: NRR is ((1 − churn) × (1 + expansion))^12. If you only know your NRR, set churn first and nudge expansion until the NRR under the slider matches.

Sources

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