Unit & Growth Economics Calculator

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Contents

Unit Economics Calculator

How it works for Customer Units
How it works for Product Units
Your Product Unit Economics

LATER: Growth Economics Calculator

How it works
Your Growth Economics
Your Projected Growth Curves
ulator

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 CLV/CAC based Unit Economics - How it wo
Having positive unit economics immediately turns your business into a
viable investment opportunity. Follow these steps to work out the profit
per product unit.

1
We will start by calculating the cost of acquiring and owning a customer over
the course of a single year. This is called the customer acquisition cost. 

To do this we need two figures:
A - Total cost of customer acquisition

This is the total spent on acquiring a customer over a year. This includes sales
and marketing costs.
B - Projected number of customers

This is the number of customers you think you will acquire (gross customer
adds) over the course of a year.

To work out the customer acquisition cost CAC we simply divide A by B

2
Now we need to work out the customer lifetime value (CLV / CLTV).
This time we will need two more figure, and we will use the Gross Profit per Customer and the
lifetime in years of a customer.

C - Gross Profit/Margin = Unit Revenue - Direct Cost of Sales and

create Product/Service
 Now we need to work out the customer lifetime value (CLV / CLTV).
This time we will need two more figure, and we will use the Gross Profit per Customer and the
lifetime in years of a customer.

C - Gross Profit/Margin = Unit Revenue - Direct Cost of Sales and

create Product/Service

D - Lifetime in years of a customer = 1 / annual churn rate

To work out the customer lifetime value CLV multiply the Gross Profit by lifetime in years
minus the CAC value.

Now we need to work out the CLV/CAC rate

To work out the final CLV/CAC rate, divide the CLV by CAC
cs - How it works
usiness into a
out the profit

A B CAC

customer over $79,444 / 13,200 = $6.02

isition cost. 

Past Marketing Costs 2019 Past Number of Customer Adds (07/2019 - 06/2020)

his includes sales Pauta Redes $138.89 85 1100

Eventos $11,111.11 Mou 1100
Arriendo Galpones $33,333.33 GE 1100
Cost 4 $0.00 .com 1100
oss customer
Cost 5 $0.00 sorpresas 1100
Past Sales Costs 2019 p80 1100
divide A by B
Nómina vendedores $33,333.33 chia 1100
Telefonos/Internet $1,388.89 Month 8 1100
Rodamientos $138.89 Month 9 1100
Cost 4 $0.00 Month 10 1100
Cost 5 $0.00 Month 11 1100
Month 12 1100

C D CLV / CTLV

er Customer and the

-$5,917.83 * 0.06 = -$387.54

of Sales and
er Customer and the

of Sales and Unit Revenue $4.17 Annual churn rate

1551.12%

Direct Cost of Sales, create & deliver Product/Service # Clients beginning of period (07/2019 - 06/2020)
n rate
Tela insumo confección promedi $5,922.00 850
y lifetime in years
Direct Cost 2 $0.00 # Clients added by end of period
Direct Cost 3 $0.00 1
Direct Cost 4 $0.00 # Clients lost by end of period
Direct Cost 5 $0.00 13,200
Direct Cost 6 $0.00 # Clients end of period (07/2019 - 06/2020)

-12,349

CLV / CTLV CAC CLV / CTLV

-$387.54 / $6.02 = -64.39

ds (07/2019 - 06/2020)

700
500
2,200
800
2,800
2,000
1,200
(07/2019 - 06/2020)

19 - 06/2020)
"Your company's name" Product Unit Economics Calcul

Replace the sample numbers in the "Value" column below with your own

Metric Value
Total cost of customer acquisition $79,444.44
Projected number of customers 13,200
Gross Profit/Margin -$5,917.83
Lifetime in years of a customer 0

Help
Need help understanding these metrics?
Read the 'How it works' guide
More than one product / line of products?

Duplicate this sheet for each product or product line and repeat the process
Remember to split the costs of customer acquisition and product creation by product line too
Economics Calculator

Your unit economics

Cost of acquiring a customer unit over a year
$6.02

Customer Lifetime Value

-$381.52

by product line too

 Product Unit Economics - How it works
Having positive unit economics immediately turns your business into a
viable investment opportunity. Follow these steps to work out the profit
per product unit.

We will start by calculating the cost of acquiring and owning a customer over
1 the course of a single year. This is called the customer unit cost. 

To do this we need two figures:
A - Total cost of customer acquisition and maintenance 

This is the total spent on acquiring and keeping a customer over a year. This
includes customer service.
B - Projected number of customers

This is the number of customers you think you will acquire over the course
of a year.

To work out the customer unit cost we simply divide A by B

Next we need to work out the cost of producing a product unit over a year.
2 
We will again need two figures:

C - Total cost of producing and servicing products

This is the total spent on producing and servicing products over a year.

D - Projected number of product units sold

This is the number of products you think you will sell over a year.

To work out the cost of producing a product unit divide C by D

 This is the number of products you think you will sell over a year.

To work out the cost of producing a product unit divide C by D

Now we need to work out the cost of acquisition per product unit. You may now
3 start to see how we can eventually calculate the profit per product unit. 

This time we will only need one more figure, and we will use the Customer Unit
Cost from earlier

E - Average number of product units sold per customer

This is the average number of product units you will sell to each customer. If it is a monthly
subscription service, this can be the number of months a customer will pay for during a year
for example.

To work out the cost of acquisition per product unit divide the Customer Unit Cost by
E.

Now all we need to do is plug in F - Product Unit Price (this is the price for a single
4 product unit i.e. the monthly cost of a subscription service) into the formula below
to get our profit per product unit.

F - ( (A / B) / E ) - (C / D) = Profit per product unit

or

Product unit price - Cost of acquisition per product unit - Cost of producing a
product unit = Profit per product unit
w it works
business into a
rk out the profit

g a customer over
it cost.  Customer Unit
A B
Cost

$125,000 / $12,000 = $10

over a year. This

over the course

er a year.

C D Cost of producing a
product unit

$200,000 / 60,000 = $3
 You may now
unit. 
Customer Unit E Cost of acquisition
Cost per product unit
Customer Unit
$10.42 / 5 = $2.08
omer
mer. If it is a monthly
pay for during a year

omer Unit Cost by

e price for a single

he formula below
F Cost of acquisition Cost of producing a
per product unit product unit
$50.00 - $2.08 - $3.33

Profit per
producing a product unit
= $44.58
"Your company's name" Product Unit Economics Calcul

Replace the sample numbers in the "Value" column below with your own

Metric Value
Total cost of customer acquisition and maintenance $125,000.00
Projected number of customers 12,000
Total cost of producing & servicing products $200,000.00
Projected number of product units sold 60,000
Average number of product units sold per customer 5
Product unit price $14.00

Help
Need help understanding these metrics?
Read the 'How it works' guide
More than one product / line of products?

Duplicate this sheet for each product or product line and repeat the process
Remember to split the costs of customer acquisition and product creation by product line too
Economics Calculator

Your unit economics

Cost of acquiring and owning a customer
unit over a year $10.42

Cost of producing a product unit over a year

$3.33

Cost of acquisition per product unit over a

year $2.08

Profit per product unit $8.58

by product line too

 Growth Economics - How it works
This sheet will show you how to calculate your businesses' projected revenue
acquisition volumes.

In the tables below, Year 0 is either the previous year or the current year pro
previous year data. Year 0 cells populate with the data you entered on the pr

Cost Year 0
1 Acquiring & servicing customers $125,000.00

Creating & servicing Product units $200,000.00

Number of customers acquired Year 0

2 Low

Medium 12,000

High

Average no. product units sold per customer 5

3

Single product unit price $8.00

4

Customer acquisition scenarios Year 0

5 Acquiring a customer

Low
Costs

Medium $10.42
Costs
$10.42

High

Creating & servicing Product units

Low

Costs
Medium $3.33

High

Total revenue

Low
Reveune

Medium $480,000

High

Product unit profit

Low
Profit

Medium -$5.75

High
works
nesses' projected revenue and profit per product unit based on different customer

ar or the current year projection, if you don't have

ata you entered on the previous tab.

Year 1 Year 2 Year 3

$125,000.00 $148,500.00 $172,854.00 a. Start with the known costs for year 0.

$200,000.00 $249,000.00 $283,500.00 b. Fill in the highlighted cells by projecting

your costs for acquiring & servicing customers
and creating & servicing product units over a 3
year period.

Year 1 Year 2 Year 3 Growth rate

c. In this table, project different customer
11,000 13,000 15,000 8% acquisition volumes (low, medium and high) to
see how it affects your growth economics. Fill
in the highlighted cells.
20,000 25,000 30,000 36%

28,000 36,000 42,000 52%

5 5.5 6 6%
d. Fill in the projected average number of
products units sold per customer over the 3
years. If this changes, why do you think this?

$8.00 $8.00 $8.00 0%

e. Fill in projected single product revenue over
the 3 years

Year 1 Year 2 Year 3 Growth rate f. These two tables will populate your
projected costs for acquiring a customer and
creating the product units based on the
different customer acquisition volume
$11.36 $11.42 $11.52 3% scenarios above.

$6.25 $5.94 $5.76 -18%

 $4.46 $4.13 $4.12 -27%

$3.64 $3.48 $3.15 -2%

$2.00 $1.81 $1.58 -22%

$1.43 $1.26 $1.13 -30%

g. These tables will populate your

projected revenue and product unit profit
$440,000 $572,000 $720,000 14%
based on the different customer volume
scenarios.
$800,000 $1,100,000 $1,440,000 44%

$1,120,000 $1,584,000 $2,016,000 61%

-$7.00 -$6.91 -$6.67 5.1%

-$0.25 $0.25 $0.66 -148.7%

$2.11 $2.62 $2.76 -178.3%

 known costs for year 0.
! Remember to take into account expected efficiency
hlighted cells by projecting gains in customer acquisition and creating the product
cquiring & servicing customers units. Ask yourself why you think this is different for
servicing product units over a 3 each, if it is.

project different customer

mes (low, medium and high) to
ts your growth economics. Fill
ed cells.

jected average number of

old per customer over the 3
anges, why do you think this?

ed single product revenue over

bles will populate your

for acquiring a customer and
oduct units based on the
mer acquisition volume
e.
 will populate your
ue and product unit profit
fferent customer volume
 "Your company's name" Product Unit Economics Calculato

Cost Year 0
Acquiring & servicing customers $125,000
Creating & servicing Product units $200,000

Number of customers acquired Year 0

Low
Medium 12,000

High

Average no. product units sold per customer 5

Single product unit price $14.00

Customer acquisition scenarios Year 0

Acquiring a customer
Low
Costs

Medium $10.42

High
Creating & servicing Product units
Low
Costs

Medium $3.33

High
Total revenue
Reveune

Low
Medium $840,000.00

High
Product unit profit
Low
Profit

Medium $0.25

High
Want to see a visualisation?
Look at your projected growth curves
Economics Calculator

Year 1 Year 2 Year 3

$125,000 $148,500 $172,854
$200,000 $249,000 $283,500

Year 1 Year 2 Year 3 Growth rate

11,000 13,000 15,000 8%
20,000 25,000 30,000 36%
28,000 36,000 42,000 52%

5 5.5 6 6%

$8.00 $8.00 $8.00 0%

Year 1 Year 2 Year 3 Growth rate

$11.36 $11.42 $11.52 $0.03

$6.25 $5.94 $5.76 -$0.18
$4.46 $4.13 $4.12 -$0.27

$3.64 $3.48 $3.15 -$0.02

$2.00 $1.81 $1.58 -$0.22
$1.43 $1.26 $1.13 -$0.30

$440,000.00 $572,000.00 $720,000.00 -$0.05

$800,000.00 $1,100,000.00 $1,440,000.00 $0.20
$1,120,000.00 $1,584,000.00 $2,016,000.00 $0.34

-$7.00 -$6.91 -$6.67 -$3.99

-$0.25 $0.25 $0.66 $0.38
$2.11 $2.62 $2.76 $1.23
"Your company's name" Product Unit Economics Calculat

Customer acquisition scenarios -

product unit profit
£4.00

£2.00
Product unit profit

Low volume
£0.00
Year 0 Year 1 Year 2 Year 3 Medium volume
-£2.00 High volume

-£4.00

-£6.00

-£8.00
Time

Help
Need help understanding these metrics?
Read the 'How it works' guide
Need help understanding Growth Economics?
Growth Economics are covered in 'The 7 Rules to Sustainable Business Growth' guide
Economics Calculator

Customer acquisition scenarios -

revenue
£2,500,000

£2,000,000
volume Low volume
um volume £1,500,000 Medium volume
Revenue

volume High volume

£1,000,000

£500,000

£0
Year 0 Year 1 Year 2 Year 3
Time

rowth' guide
product unit profit
Year 0 Year 1 Year 2 Year 3
Low volume £0.25 -£7.00 -£6.91 -£6.67
Medium volume £0.25 -£0.25 £0.25 £0.66
High volume £0.25 £2.11 £2.62 £2.76

revenues
Year 0 Year 1 Year 2 Year 3
Low volume £840,000 £440,000 £572,000 £720,000
Medium volume £840,000 £800,000 £1,100,000 £1,440,000
High volume £840,000 £1,120,000 £1,584,000 £2,016,000