Unit Economics Simulator
Adjust price, margin, churn, and acquisition, or load a preset.
Price & cost
Retention
Acquisition
~0.0 month lifespan
Months to recover CAC
Viability
Dangerous12-month subscriber curve
Analysis
Glossary Show terms Hide terms
| Term | Meaning |
|---|---|
| ARPU | Average revenue per user: monthly revenue from one active customer. |
| LTV | Customer lifetime value: gross profit expected from one customer over their average lifespan. (ARPU × Margin %) ÷ Churn % |
| CAC | Customer acquisition cost: blended spend to win one new customer, including paid media, sales, and onboarding. |
| LTV : CAC | Lifetime value divided by acquisition cost. A common venture-scale target is 3.0x or above. LTV ÷ CAC |
| Payback | Months to recover CAC from monthly gross profit per customer. CAC ÷ (ARPU × Margin %) |
| Churn | Share of active customers who cancel each month. Lower churn lengthens lifespan and raises LTV. Lifespan ≈ 1 ÷ monthly churn |
| MRR | Monthly recurring revenue at the model's growth ceiling. Plateau × ARPU |
| ARR | Annualised revenue run-rate at plateau. MRR × 12 |
| Growth ceiling | Subscriber count where monthly cancellations equal new acquisitions. Net growth stops unless retention or acquisition improves. New customers ÷ churn |
Subscription Economics Advisory Report
Defined Business Variables
| ARPU (Average Price) | $0 |
| Cost/Gross Margin | 0% |
| Monthly Churn Profile | 0% |
| Acquisition Vector (CAC) | $0 |
| Target Monthly Inflow | 0 /mo |
Steady-State Run Limit Ceilings
| Active Account Ceiling | 0 |
| MRR Peak Threshold | $0 |
| Monthly Net Profit Peak | $0 |
| Annual Run-Rate Limit | $0 |
| Payback Period | 0 months |
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About oContis Studio
oContis Studio is a London-based creative consultancy helping brands and businesses grow through Shopify. We deliver end-to-end ecommerce solutions across strategy, design, development, and optimisation — from custom Shopify themes and apps to conversion-focused storefronts and Shopify Plus implementations.
Whether you are validating unit economics, replatforming, or scaling retention and acquisition, we partner with ambitious brands to turn subscription and ecommerce models into durable, profitable growth. Visit www.ocontis.studio or email hello@ocontis.studio to discuss your project.
Unit Economics Calculator FAQs
What is unit economics for subscription businesses?
Unit economics measure whether each customer relationship is profitable over time. For subscription and recurring-revenue brands, the core formula compares customer lifetime value (LTV) to customer acquisition cost (CAC). Healthy models typically target an LTV:CAC ratio of at least 3:1, with payback periods short enough to reinvest in growth without cash-flow strain.
What LTV:CAC ratio is considered healthy?
Many venture-backed and ecommerce operators use 3:1 as a baseline target for sustainable scaling. Ratios between 2:1 and 3.5:1 are often viable but leave less margin for error. Below 2:1, acquisition spend usually destroys value faster than retention can recover it, so growth stays inefficient until pricing, churn, or channel economics improve.
How do you calculate customer lifetime value (LTV)?
A practical subscription LTV estimate multiplies monthly gross profit per customer by average customer lifespan. Lifespan is often derived from churn rate (for example, 5% monthly churn implies a ~20-month average lifespan). This calculator uses ARPU, gross margin, and churn to project LTV, payback period, and steady-state MRR/ARR ceilings.
What is CAC payback period and why do growth teams track it?
CAC payback is the number of months of gross profit needed to recover blended customer acquisition cost. Founders and growth managers use it as a cash-flow check alongside the LTV:CAC ratio. A 3:1 ratio with an 18-month payback can still starve working capital. This tool shows both from the same ARPU, margin, churn, and CAC inputs.
What is a growth ceiling in subscription models?
The growth ceiling (or plateau) is the point where monthly churn equals new customer acquisition, so net subscriber growth stops even if you keep spending on ads. Breaking through requires improving retention, increasing ARPU, or making acquisition more efficient. This simulator visualises that plateau over a 12-month horizon.
Who is this unit economics simulator for?
The tool is built for founders, ecommerce managers, and growth leads evaluating subscription or repeat-purchase models on Shopify. Use industry presets (fashion, consumables, health & beauty) or custom inputs to stress-test pricing, churn, and CAC before scaling paid acquisition. For hands-on stack support, see our Shopify stack audit.
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Need help improving LTV or CAC?
If app stack, checkout, or fulfilment architecture is distorting your unit economics, tell us what you are seeing. We will confirm whether a stack audit is the right entry point.
About the Unit Economics Simulator
What is a Shopify unit economics calculator?
A Shopify unit economics calculator lets founders, ecommerce managers, and growth leads test whether each new customer is profitable over time. This free LTV CAC calculator uses ARPU, gross margin, monthly churn, blended customer acquisition cost, and new-customer volume to project customer lifetime value, LTV:CAC ratio, CAC payback period, and the subscriber growth ceiling.
How do you calculate customer lifetime value on Shopify?
A practical customer lifetime value calculator for subscription and repeat-purchase brands multiplies monthly gross profit per customer by average lifespan. Lifespan is often 1 divided by monthly churn. Pair that LTV with blended CAC to get the LTV to CAC ratio ecommerce teams take to a board or budget review. See our guide to maximizing customer lifetime value on Shopify Plus.
When should a growth manager run an LTV CAC calculator?
Run the model before you raise paid acquisition, when payback feels long, or when revenue grows and contribution still shrinks. High ROAS can hide a weak unit. We wrote about that gap in why a Shopify store can hit 4x ROAS and still lose money, and about the plateau in why most Shopify stores do not scale past $50k a month.
Built by oContis Studio, a London-based Shopify Plus agency. If app stack, checkout, or fulfilment is distorting the numbers, book a discovery call.