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Free tool

Unit economics calculator: do your ads pay off?

Six numbers about your business show what a new customer costs, what they bring in over their lifetime, and the highest cost per lead you can afford without losing money. The fields hold an example — enter your own numbers.

Your numbers

$
What a customer pays for one purchase.
%
The share of the order left after cost of goods, before ad spend.
On average. For a one-off service, use 1.
$
%
How many leads out of 100 become customers.

Result

Customer acquisition cost (CAC)
—
Enter leads and conversion
Customer lifetime value (LTV)
—
LTV : CAC
—
New customers per month
—
Current cost per lead
—
Break-even cost per lead
—
Profit from the first purchase
—
Profit over customer lifetime
—
ROMI, first purchase
—
ROMI, lifetime
—

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Profit here is gross: only cost of goods and ad spend are subtracted. Salaries, rent and taxes are not included, which is why many businesses aim for an LTV to CAC ratio of 3 to 1.

How unit economics is calculated

Unit economics is the math of a single customer: what it costs to win them and what they bring in. The calculator uses five formulas:

  • CAC = ad spend ÷ new customers.
  • LTV = average order value × gross margin × purchases per customer.
  • LTV : CAC — how many times a customer pays back what it cost to acquire them.
  • ROMI = (gross profit from new customers − ad spend) ÷ ad spend × 100%.
  • Break-even cost per lead = LTV × lead-to-customer conversion. Pay more than that and every new customer loses money.

The first purchase and the full customer lifetime are shown separately. Salons, cafés and service businesses often lose money on the first order and profit only on repeat visits. That works as long as customers really come back, so take the purchase count from your own data, not from hopes.

Working out the whole picture — channels, budgets and a plan — is part of marketing strategy.

Frequently asked questions

What is unit economics in simple terms?

It is the math of one customer: what it costs to acquire them and how much money they bring in. If a customer brings in more than they cost to acquire, ads build profit. If less, every new customer adds to the loss.

What is a good LTV to CAC ratio?

A common benchmark is 3 to 1: a customer brings three times more gross profit than they cost to acquire. The buffer covers salaries, rent and taxes, which this calculation leaves out. Between 1 and 3 ads pay off, but barely. Below 1 they lose money.

Why do ads lose money on the first purchase but pay off over the lifetime?

That happens in businesses with repeat purchases. The first order does not cover acquisition; the money comes from customers who return. This only works if customers really do come back.

What if my ads don't pay off?

There are four levers: lower the cost per lead (ads, audiences, landing page), raise lead-to-customer conversion (reply speed, sales script, chatbot), raise the average order value, and bring customers back for repeat purchases. Change the numbers above to see which lever moves the result most.

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