A 30-second unit-economics audit
A 30-second unit-economics audit
Once a quarter (and more often before a round) you need to quickly answer: "is our unit economics healthy right now?" Usually that means opening Excel, recalling the formulas for LTV, CAC and Payback, checking you didn't mix up monthly and annual churn, and matching it against benchmarks from memory.
There's a faster way. If your values are already in a spreadsheet — run them through a calculator and get the result + the norm in 30 seconds.
What an audit measures
The minimum set that answers "is the economics healthy":
| Metric | Formula | Healthy norm | ||
|---|---|---|---|---|
| LTV | ARPA / Monthly Churn (or AOV × frequency × lifetime) | contextual | ||
| CAC | (Marketing + Sales) / new customers | contextual | ||
| LTV:CAC | LTV / CAC | ≥ 3 | ||
| CAC Payback | CAC / (MRR per customer × Gross Margin) | < 18 months | ||
| Gross Margin | (Revenue − COGS) / Revenue | 75–85% |
LTV:CAC ≥ 3 AND CAC Payback < 18 months. If only one holds — there's a problem, and fixing it is the quarter's priority.
How to run spreadsheet values
1. Gather the inputs you need in one row: aov, freq, life (or ltv, cac directly).
2. Open the relevant calculator — e.g. LTV:CAC.
3. Enter the values (or pass them straight in the URL — see below) and get the result, benchmark and interpretation.
Passing values via the URL is the fastest way for a repeatable audit. Each input is encoded by its key:
/en/ltv?aov=2500&freq=4&life=3
/en/cac?spend=50000&customers=200
/en/ltv_cac?ltv=9000&cac=3000
Save these links in Notion next to your spreadsheet — next quarter you just swap the numbers in the URL.
Reverse audit: "what CAC can we afford?"
It's often more useful to calculate not "what is" but "what should be". Open LTV:CAC, enable Goal mode and set a target:
> With LTV $9,000 and a target LTV:CAC = 3 → the maximum affordable CAC = $3,000.
If your actual CAC is higher, you have a concrete goal: either lower CAC or raise LTV. That turns an abstract "audit" into an action plan.
Common mistakes an audit catches
1. Blended vs Paid CAC — calculate both. Blended (with organic) is always lower; operational decisions need Paid.
2. Customer churn instead of Revenue churn in LTV — if small customers leave while big ones grow, use Revenue churn.
3. LTV:CAC = 5, but Payback = 30 months — great on paper, a cash crunch in reality. That's why the audit always includes Payback.
4. Gross margin ignored — Payback is calculated through margin; without it the number is optimistic.
Audit checklist (save it)
- [ ] LTV calculated on Revenue churn (not Customer churn)
- [ ] CAC includes sales+marketing salaries, not just ads
- [ ] LTV:CAC ≥ 3
- [ ] CAC Payback < 18 months (SMB < 12)
- [ ] Gross Margin included in Payback
- [ ] Ran Goal mode: target LTV:CAC → required CAC
Bottom line
A unit-economics audit isn't "open Excel for an hour" — it's 30 seconds on a couple of calculators when the inputs are already in a spreadsheet. Save URL links with the input keys next to your data, and every quarter the audit takes exactly as long as typing in the new numbers.
Run your LTV:CAC below — the built-in calculator shows the ratio, the benchmark and the reverse calculation (target → required CAC).
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Further resources
- /en/ltv_cac — LTV:CAC + Goal mode
- /en/cacPayback — CAC Payback Period
- /en/grossMargin — Gross Margin
- /en/blog/ltv-cac-unit-economics — LTV vs CAC step by step