Unit Economics Template
A unit economics framework for Indian SaaS and consumer products. Calculates CAC, LTV, payback period, contribution margin, and cohort-level retention — with India-specific benchmarks and INR-first inputs. Free to copy, download, and use. No signup required.
# Unit Economics Template **Product:** [Name] **Model:** [ ] B2C subscription [ ] B2B SaaS [ ] Marketplace [ ] Transactional **Currency:** INR (₹) **Period:** [Month / Quarter / Year] **Prepared by:** [Name] **Date:** [Date] --- ## 1. Revenue per unit | Metric | Value | Notes | |---|---|---| | Average Revenue Per User (ARPU) — monthly | ₹ | Blended across all paid tiers | | Average Revenue Per Account (ARPA) — monthly | ₹ | For B2B: per company, not per seat | | Gross margin on revenue | % | Revenue minus direct COGS (hosting, payments, support) | | Net Revenue Retention (NRR) | % | Expansion + contraction + churn; target > 100% for SaaS | | Monthly churn rate | % | Paid users who cancel in a given month | | Average contract length | months | | **COGS breakdown (per user per month):** | Cost item | ₹ / user / month | Notes | |---|---|---| | Hosting / infrastructure | ₹ | AWS, GCP, etc. | | AI / LLM inference | ₹ | Per-user AI cost | | Payment processing | ₹ | Razorpay: ~2% + ₹3 per transaction | | Customer support (burdened) | ₹ | | | Other direct costs | ₹ | | | **Total COGS** | **₹** | | | **Gross margin** | **%** | (ARPU − COGS) / ARPU | --- ## 2. Customer Acquisition Cost (CAC) | Channel | Monthly spend (₹) | New customers acquired | CAC (₹) | Notes | |---|---|---|---|---| | SEO / content | ₹ | | ₹ | | | Paid social (Meta, LinkedIn) | ₹ | | ₹ | | | YouTube / video | ₹ | | ₹ | | | Referral / word of mouth | ₹ | | ₹ | | | Sales / outbound | ₹ | | ₹ | | | Partnerships | ₹ | | ₹ | | | **Blended total** | **₹** | | **₹** | | **Fully-loaded CAC:** Include salaries of sales and marketing headcount (burdened cost) divided by new customers acquired. Most early-stage teams underestimate CAC by 2–3× when they exclude headcount. | Component | Monthly cost (₹) | |---|---| | Ad spend | ₹ | | Sales & marketing headcount (burdened) | ₹ | | Tools (CRM, email, analytics) | ₹ | | Agency / contractor fees | ₹ | | **Total S&M spend** | **₹** | | New customers this month | | | **Fully-loaded CAC** | **₹** | --- ## 3. Lifetime Value (LTV) **Simple LTV (gross margin basis):** ``` LTV = (ARPU × Gross margin %) / Monthly churn rate ``` | Input | Value | |---|---| | ARPU (monthly) | ₹ | | Gross margin | % | | Monthly churn | % | | **LTV** | **₹** | **LTV with expansion revenue:** If NRR > 100% (customers expand over time), use the discounted cash flow method instead. Discount rate for India SaaS: typically 15–20% annually. --- ## 4. Key ratios | Ratio | Your value | India SaaS benchmark | Status | |---|---|---|---| | LTV : CAC | : 1 | > 3:1 | | | CAC payback period | months | < 18 months | | | Gross margin | % | 65–80% (SaaS) | | | NRR | % | > 100% (growth signal) | | | Monthly churn | % | < 3% (healthy) | | **CAC payback period:** ``` Payback = CAC / (ARPU × Gross margin %) ``` --- ## 5. Cohort retention Track each monthly acquisition cohort's retained revenue over time. This is more honest than aggregate churn. | Cohort | Month 0 | Month 1 | Month 3 | Month 6 | Month 12 | |---|---|---|---|---|---| | [Jan cohort] | 100% | % | % | % | % | | [Feb cohort] | 100% | % | % | % | % | | [Mar cohort] | 100% | % | % | % | % | **Observations:** - [e.g. Month-1 drop is high → onboarding problem] - [e.g. Month-3 stabilises → product has a retained core] --- ## 6. Path to contribution positive At current CAC and churn, when does a cohort become contribution-positive (cumulative revenue > CAC)? | Scenario | CAC | ARPU | Gross margin | Churn | Payback month | |---|---|---|---|---|---| | Current | ₹ | ₹ | % | % | | | Optimistic (lower CAC) | ₹ | ₹ | % | % | | | Pessimistic (higher churn) | ₹ | ₹ | % | % | | --- ## 7. India-specific considerations **Payment failure impact on churn:** UPI AutoPay failures are common in India (bank server downtime, insufficient balance). Track involuntary churn separately from voluntary churn. Involuntary churn inflates your churn rate — a dunning/retry flow can recover 20–40% of failed payments. **INR depreciation:** If you have USD-denominated costs (AWS, OpenAI/Anthropic, Stripe fees) and INR revenue, currency risk affects your gross margin. At ₹84/USD, a $0.01/user/month cost increase is ₹0.84/user/month — small at 100 users, material at 10,000. **GST pass-through:** Ensure your ARPU figures are net of GST (18%). If you collect ₹1,000/month from a customer, your recognisable revenue is ₹847 (the rest is GST owed to the government). Modelling on gross-of-GST ARPU overstates revenue.
How to use this Unit Economics template
Calculate fully-loaded CAC, not just ad spend
Early-stage teams routinely underestimate CAC by 2–3× because they only count ad spend. Fully-loaded CAC includes sales and marketing headcount (burdened: salary + benefits + equity dilution), tools, agency fees, and content production. If your LTV:CAC ratio looks great on ad spend alone but terrible when you include headcount, your business model is funding its growth with labour it isn't accounting for.
Track cohort retention before you trust your churn number
Aggregate monthly churn is misleading when your user base is growing. A cohort table (Section 5) shows what actually happens to users acquired in a given month. If Month-1 retention is 40%, you have an activation/onboarding problem. If Month-1 is 80% but Month-6 is 20%, you have a long-tail engagement problem. Both look like '5% monthly churn' in aggregate but require completely different fixes.
Separate voluntary and involuntary churn in India
India has unusually high involuntary churn — UPI AutoPay and card payments fail frequently due to bank downtime, OTP friction, and insufficient balance. Treat involuntary churn as an ops problem (dunning, retry, grace period), not a product problem. Mix them together and you'll build the wrong thing. Target: recover ≥ 30% of failed payments within 7 days through a retry and in-app notification flow.
Model your gross margin net of GST from day one
GST at 18% on SaaS revenue is owed to the government — it is not your revenue. If you model unit economics on gross-of-GST ARPU, your LTV will be overstated by 18% and your business will look more attractive than it is. Model revenue as net-of-GST from the first spreadsheet.
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Frequently asked questions
What is a good LTV:CAC ratio for an India SaaS product?
The global benchmark of 3:1 applies to India SaaS as well, but the absolute numbers are different. An India SaaS product with ₹500 ARPU and ₹1,500 CAC at 3:1 is healthy. The more important number is payback period — if CAC payback exceeds 18 months, you need significant capital to fund growth. Most India-focused SaaS products target 9–12 month payback as a capital-efficient model.
How do I calculate LTV when I don't have 12 months of retention data?
Use the simple formula (ARPU × gross margin) / monthly churn as an approximation. Be conservative: use your worst monthly churn rate, not your best. For early-stage products (< 6 months of data), LTV is an estimate, not a fact — treat it as a planning input, not a fundraising claim. State your assumptions explicitly when sharing the number with investors.
Should I include founding team time as a CAC cost?
Yes, if you are using it to make operating decisions. Exclude it if you are presenting to investors who understand that founding team time is a sunk cost at the pre-seed stage. The honest internal number includes all labour. The fundraising number typically excludes founders but includes hired sales and marketing headcount.
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