SaaS Unit Economics Template for PMs

3:1 is the commonly cited benchmark. Below 1:1 means you are losing money on every customer. 3:1 to 5:1 is healthy. Above 5:1 may mean you are under-investing in growth. The [LTV/CAC Calculator](/tools/ltv-cac-calculator) can help you model different scenarios.

When net revenue retention exceeds 100% ([net negative churn](/glossary/net-negative-churn)), the simple LTV formula breaks down because the denominator approaches zero or goes negative. Use a capped LTV calculation: project revenue per cohort for 5-7 years and sum the discounted gross profit. This gives a more realistic estimate.

No. Unit economics measure the marginal economics of one additional customer. R&D is a fixed cost that does not change with each new customer. Include R&D in your company-level P&L, not in unit economics. Include only COGS (hosting, support, payment processing) and S&M (sales, marketing).

Monthly for channel-level CAC and payback. Quarterly for LTV, gross margin, and cohort economics. Annually for a full strategic review comparing your unit economics to industry benchmarks.

CAC (customer acquisition cost) includes all sales and marketing costs divided by new customers. CPA (cost per acquisition) typically refers to the cost of a single conversion event in a specific marketing channel. CAC is a business metric. CPA is a marketing metric. See the [CAC glossary entry](/glossary/prioritization) for the full definition. ---