Unit Economics Calculator
Build a full unit economics picture from price, variable costs and acquisition spend: contribution margin per unit, payback period, lifetime value and the volume required to cover fixed costs.
Last reviewed by the Radiatus Cloud team
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Radiatus delivers cloud, security & automation for growing teams.
Does one customer make money
Unit economics asks whether a single unit of the business is profitable before any overhead. If it is not, growth makes the loss larger, and no amount of scale fixes it. This is the distinction between a business with a scaling problem and a business with a model problem, and confusing the two has ended a long list of well funded companies that assumed volume would eventually solve arithmetic.
Contribution margin comes before everything
Contribution margin is the price minus every cost that varies with the unit: cost of goods, payment processing, delivery, support, hosting attributable to that customer. What remains contributes toward fixed costs and profit. A subscription business with high contribution margin can absorb a long payback period; one with thin margins cannot, because every month of payback is a month of cash it does not have. Overhead does not belong in this calculation at all, and including it is the most common way the analysis goes wrong.
Payback and lifetime value are the two views
Payback period asks how long until this customer returns what it cost to acquire them, which is a cash question. Lifetime value asks how much they are worth in total, which is a value question. Both matter and they answer different things: a business can have an excellent LTV to CAC ratio and still fail because the payback is thirty months and the cash runs out at eighteen. The calculator reports both, plus the volume needed to cover fixed costs, so all three constraints are visible at once.
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Frequently Asked Questions
Which costs are variable?
Anything that rises with one more unit sold: goods, shipping, payment fees, per customer hosting, variable support. Salaries, rent, software licences and marketing salaries are fixed and belong below the contribution line, not in it.
Should acquisition cost include salaries?
Yes for a true CAC. Fully loaded CAC includes sales and marketing salaries, tools and commissions divided by customers acquired, not just ad spend. Paid media alone is a blended media cost and is typically half the real figure or less.
What LTV to CAC ratio should I aim for?
Three to one is the conventional benchmark for subscription businesses, with anything above five suggesting under investment in growth rather than excellence. Below two, acquisition is consuming more value than it creates.
Why does payback period matter separately?
Because it is a cash constraint rather than a value one. A long payback means each new customer consumes cash for months before returning any, so growth accelerates the cash burn. Twelve months or under is comfortable, over twenty four is a financing problem.
How should I calculate lifetime?
From monthly churn: average lifetime in months is one divided by the monthly churn rate. Five percent monthly churn gives a twenty month life. Discounting future revenue is more accurate for long lifetimes, which the calculator applies when you supply a discount rate.
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How to Use
Enter your price, variable costs, acquisition cost and retention to see the per unit economics.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
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