Unit Economics Calculator
Calculate Customer Lifetime Value (LTV), LTV:CAC ratio, and payback period to assess the health of your Nigerian business model.
Unit Economics Inputs
₦
₦
mo
₦
Lifetime Value (LTV)
₦12,000
LTV:CAC Ratio
2.4:1
CAC Payback Period
3.3 months
Gross Margin per User
75.0%
Contribution per User / Month
₦1,500
LTV:CAC below 3:1 — business may struggle to scale profitably.
How to Use This Calculator
Enter your Customer Acquisition Cost (CAC) — the average amount spent to acquire one new customer (marketing spend ÷ customers acquired), average monthly revenue per user (ARPU), average customer lifetime in months, and variable cost per user per month (direct costs to serve each customer). The calculator shows LTV, LTV:CAC ratio, and payback period.
The Formula
Contribution per User/Month = ARPU − Variable Cost per User/Month
LTV = Contribution per User/Month × Avg Lifetime (months)
LTV:CAC Ratio = LTV ÷ CAC
Payback Period = CAC ÷ Contribution per User/Month (months)
Benchmark:
LTV:CAC ≥ 3:1 → Good business model
LTV:CAC 1–3:1 → Marginal — needs improvement
LTV:CAC < 1:1 → Losing money on every customer
Payback ≤ 12 months → Healthy
Example
Lagos SaaS Startup
Customer Acquisition Cost (CAC)₦5,000
Monthly Revenue per User₦2,000
Variable Cost per User/Month₦500
Avg Customer Lifetime8 months
LTV₦12,000
LTV:CAC Ratio2.4:1
Payback Period3.3 months
A 2.4:1 ratio is acceptable but below the ideal 3:1 benchmark. To improve: reduce CAC through better organic marketing, increase ARPU through upselling, reduce churn to extend lifetime, or cut variable costs per user.
FAQ
The global benchmark is 3:1 or higher — for every ₦1 spent acquiring a customer, you generate ₦3 in lifetime value. Below 1:1 means the business destroys value with every customer acquired and is unsustainable. For Nigerian startups, achieving 3:1 can be challenging due to higher customer acquisition costs (low digital penetration, fragmented media) and shorter customer lifetimes in some sectors. Even 2:1 can be viable if payback period is short and you have strong repeat purchase rates.
Key strategies for Nigerian markets: (1) Leverage WhatsApp Business for direct customer communication — very high open rates and near-zero cost. (2) Build a referral programme — Nigerians trust recommendations from family and friends. (3) Invest in SEO and content marketing for long-term organic traffic. (4) Partner with market associations, churches, or professional bodies for bulk acquisition. (5) Focus on Lagos Island/VI for B2B — high density of decision-makers in a small geographic area.
LTV (Lifetime Value) and CLV (Customer Lifetime Value) are the same metric — the total net revenue (or profit) expected from a customer over their entire relationship with your business. This calculator uses a simplified version: contribution margin × average months. More sophisticated models account for discount rates (the time value of money) and probabilistic churn models. For early-stage businesses, this simplified approach is sufficient for decision-making.