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

Customer Acquisition Cost (CAC)

₦

Avg Revenue per User / Month

₦

Avg Customer Lifetime (months)

Variable Cost per User / Month

₦

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.

Extended

LTV Sensitivity & CAC Payback Timeline

See how LTV changes at different customer lifetime assumptions, and track the month-by-month CAC recovery curve

How LTV and LTV:CAC ratio change at different customer lifetime (retention) assumptions

Bar colour: green = LTV:CAC ≥3x, blue = ≥1x, red = below 1x. Red dashed line = CAC threshold.

Lifetime	LTV	LTV:CAC	Verdict
3 months	₦4,500	0.9x	Loss-making
6 months	₦9,000	1.8x	Marginal
8 months (current)	₦12,000	2.4x	Marginal
12 months	₦18,000	3.6x	Healthy
18 months	₦27,000	5.4x	Healthy
24 months	₦36,000	7.2x	Healthy

Every extra month of customer retention directly adds ₦1,500 to LTV. Retention improvement is often more cost-effective than CAC reduction.

Professional

Full Unit Economics Dashboard & Churn Impact Modeling

Simulate user growth and MRR over time, run cohort profit analysis, and model how churn rate changes everything

Simulate user base growth and monthly recurring revenue over your target period

New Users/Month

Monthly Churn %

Target Months

Month	Users	MRR	Cum. Profit
Month 1	200	₦400,000	-₦700,000
Month 2	376	₦752,000	-₦1,136,000
Month 3	531	₦1,061,760	-₦1,339,680
Month 4	667	₦1,334,349	-₦1,338,918
Month 5	787	₦1,574,227	-₦1,158,248
Month 6	893	₦1,785,320	-₦819,258
Month 7	986	₦1,971,081	-₦340,947
Month 8	1,067	₦2,134,552	₦259,966
Month 9	1,139	₦2,278,405	₦968,770
Month 10	1,202	₦2,404,997	₦1,772,518
Month 11	1,258	₦2,516,397	₦2,659,816
Month 12	1,307	₦2,614,429	₦3,620,638

By month 12: 1,307 active users, ₦2,614,429 MRR.

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.