Unit economics lab
Work out whether a loss-making company is buying customers profitably or simply buying revenue — the question that decides most new-age listings.
Runs entirely in your browser — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Cost to acquire a customer
Total sales and marketing spend divided by new customers added. Discounts and cashbacks belong in here, whatever the accounts call them.
- Average order value and Contribution margin
What a customer spends per order, and what fraction of that survives the direct costs of serving it. Contribution margin, not gross margin — delivery and payment costs count.
- Orders per year and Annual retention
Frequency and stickiness. Retention drives lifetime far more than most people expect: 60% retention means an average customer life of two and a half years, 80% means five.
- Read payback and the LTV/CAC ratio
Payback under twelve months and LTV/CAC above three is the conventional bar for a healthy model. Below one on LTV/CAC, every new customer destroys value.
Worked example: A delivery business that is losing money on purpose
It costs ₹1,200 to win a customer. They spend ₹800 an order, six times a year, and 25% of that survives direct costs. 60% are still around a year later.
What to enter
- Cost to acquire a customer
- ₹1,200
- Average order value
- ₹800
- Contribution margin
- 25%
- Orders per year
- 6
- Annual retention
- 60%
What it shows you
- Contribution per order
- ₹200
- Contribution per year
- ₹1,200
- Average customer life
- 2.5 years
- Lifetime value
- ₹3,000
- LTV / CAC
- 2.5×
- Payback period
- 12 months
1 ÷ (1 − 0.6)
below the 3× bar
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Fundamental Analysis12 minValuing loss-making new-age companiesNo earnings, no P/E, and a story about the future. Contribution margin, cohorts and the specific question that separates a business from a subsidy.
- Fundamental Analysis11 minMarket share: who is actually winningRevenue growth tells you the company grew. Share tells you whether it grew because it is winning or because the whole industry did.
- Fundamental Analysis11 minOne customer, one product, one plantA business can look excellent on every ratio and depend entirely on something that could disappear in a single quarter. Where that dependence is disclosed.
- Fundamental Analysis11 minPeople costs, and what they revealFor a services business, employees are the entire cost structure. Revenue per employee, attrition and utilisation say more about the next two years than the margin does.
- Fundamental Analysis12 minPricing power: who can raise prices and keep the customerThe single most valuable property a business can have, and the one that shows up in the numbers years after it shows up in behaviour.