---
title: "Unit Economics Example: SaaS and Marketplace"
description: "A unit economics example with every step shown: CAC, gross margin, contribution, LTV and CAC payback for a SaaS product and a marketplace, plus five traps."
canonical_url: "https://builderscamp.com/guides/other/unit-economics-example-saas-marketplace"
date_published: "2026-10-06"
date_modified: "2026-10-06"
author: "Simonetta Batteiger"
publisher: "Builders Camp"
guide_class: "other"
---

# A unit economics example SaaS and marketplace teams can copy: CAC, LTV, gross margin and payback

**TL;DR:** In the invented SaaS example below, blended CAC is 2,000 dollars, gross margin is 75 percent, gross margin LTV is 7,500 dollars, LTV to CAC is 3.75 and CAC payback is 10.7 months; on paid customers alone, payback stretches to 16 months and the ratio falls to 2.5. The marketplace example earns 9 dollars of contribution on a 120 dollar booking, and its buyer LTV to CAC of 2.27 sits under the 3x rule of thumb investors quote.

## What do CAC, LTV, gross margin and payback measure?

Unit economics asks whether one customer, or one transaction, earns back what it cost to win and serve. Four numbers answer it: customer acquisition cost (CAC), gross margin, lifetime value (LTV) and CAC payback. The investors who publish benchmarks for them agree on one threshold more than any other. [Bessemer Venture Partners' Scaling to $100 Million](https://www.bvp.com/atlas/scaling-to-100-million) says: "We recommend investing in customer acquisition when CLTV / CACs are 3x+," and reports that the average CAC payback for cloud companies with 1 to 10 million dollars of ARR is 15 months.

Those are portfolio averages from one firm in 2021, not a law, and they describe cloud software, not every business model. They still give you something to compare your own numbers against, which is what the rest of this guide does with two invented companies, every step of the arithmetic written out.

| Metric | Formula used here | What it tells you |
|---|---|---|
| CAC | Acquisition spend in a period divided by customers acquired in that period | What one new customer costs |
| Gross margin | (Revenue minus cost of delivery) divided by revenue | How much of each dollar is left after serving the customer |
| Contribution margin | Gross profit minus other per-customer variable costs | What one customer actually contributes |
| LTV | Monthly gross profit or contribution multiplied by expected lifetime in months | What one customer is worth over the relationship |
| CAC payback | CAC divided by monthly gross profit per customer | Months until a customer has repaid their acquisition cost |

## How do you compute unit economics for a SaaS product?

The company below is invented for this guide: a B2B invoicing tool selling one plan at 250 dollars a month. Its numbers for one quarter are the inputs for every calculation that follows.

| Input for the quarter | Value |
|---|---|
| Customers at start of quarter | 1,000 |
| New customers acquired | 120 (80 from paid campaigns, 40 organic) |
| Paid media spend | 96,000 dollars |
| Sales and marketing salaries | 120,000 dollars |
| Marketing tools and events | 24,000 dollars |
| Price (average revenue per account) | 250 dollars a month |
| Cancellations (voluntary churn) | 2.0 percent of customers a month |
| Failed payments never recovered (involuntary churn) | 0.5 percent of customers a month |
| Customer success time per account | 25 dollars a month |

### Step 1: CAC, blended and paid

Total acquisition spend is 96,000 + 120,000 + 24,000 = 240,000 dollars. Blended CAC divides that by every new customer: 240,000 / 120 = 2,000 dollars. Paid CAC divides it only by the customers paid campaigns brought in: 240,000 / 80 = 3,000 dollars. Check: 2,000 × 120 = 240,000 and 3,000 × 80 = 240,000.

Both numbers are correct; they answer different questions. Blended CAC describes the business as it runs today. Paid CAC answers the question a budget request actually asks, which is what the next customer bought with money will cost.

### Step 2: gross margin per account

| Cost of delivery per account per month | Dollars |
|---|---|
| Hosting | 22.00 |
| Third-party APIs (bank feeds, document scanning) | 18.00 |
| Support | 15.00 |
| Payment processing at an assumed 3 percent of 250 | 7.50 |
| Total cost of delivery | 62.50 |

Gross profit per account is 250 − 62.50 = 187.50 dollars a month. Gross margin is 187.50 / 250 = 75 percent. Check: 250 × 0.75 = 187.50.

### Step 3: contribution margin per account

Customer success time is a per-account cost that many companies book outside cost of delivery. Subtract it: 187.50 − 25 = 162.50 dollars a month, or 162.50 / 250 = 65 percent of revenue. Check: 162.50 + 25 + 62.50 = 250.

### Step 4: lifetime and LTV

Total monthly churn is 2.0 + 0.5 = 2.5 percent, so the expected lifetime is 1 / 0.025 = 40 months. Three LTVs follow from the same lifetime:

| LTV basis | Arithmetic | LTV |
|---|---|---|
| Revenue | 250 × 40 | 10,000 dollars |
| Gross profit | 187.50 × 40 | 7,500 dollars |
| Contribution | 162.50 × 40 | 6,500 dollars |

The 1 / churn shortcut assumes churn stays flat forever, which young cohorts rarely prove. a16z's [16 Startup Metrics](https://a16z.com/16-startup-metrics/) prefers measuring "12 month and 24 month LTV" instead of predicting lifespan. At 2.5 percent monthly churn, an account is still active on average for (1 − 0.975^24) / 0.025 = 18.21 of its first 24 months, because 0.975^24 = 0.5446. The 24-month gross profit LTV is 187.50 × 18.21 = 3,415 dollars.

### Step 5: LTV to CAC

| LTV basis | On blended CAC (2,000) | On paid CAC (3,000) |
|---|---|---|
| Revenue LTV (10,000) | 5.00 | 3.33 |
| Gross profit LTV (7,500) | 3.75 | 2.50 |
| Contribution LTV (6,500) | 3.25 | 2.17 |
| 24-month gross profit LTV (3,415) | 1.71 | 1.14 |

The same company is a 5.0 or a 1.14 depending on which cell a slide quotes. The honest headline for a decision about spending more on paid campaigns is the paid column: 2.5 on gross profit, 2.17 on contribution.

### Step 6: CAC payback

Payback on gross profit, blended: 2,000 / 187.50 = 10.67 months. Paid: 3,000 / 187.50 = 16.0 months. Check: 187.50 × 16 = 3,000. On contribution the paid figure stretches to 3,000 / 162.50 = 18.46 months. Bessemer measures payback this way, "against gross margin-adjusted ARR given that the variable costs associated with selling a cloud software product do not accrete to profit."

## How do the numbers change for a marketplace?

A marketplace's unit is usually a transaction, its revenue is only a slice of what passes through it, and it pays to acquire two sides. The second company is also invented: a home cleaning marketplace that completed 30,000 bookings in the quarter at an average booking value of 120 dollars.

Gross merchandise value (GMV) is 30,000 × 120 = 3,600,000 dollars. That is not revenue. As a16z's 16 Startup Metrics puts it, "GMV does not equal revenue!" The marketplace keeps a 15 percent take rate, so revenue per booking is 120 × 0.15 = 18 dollars, and quarterly revenue is 30,000 × 18 = 540,000 dollars. The [a16z Marketplace Glossary](https://a16z.com/the-marketplace-glossary/) says take rates usually vary "from a low single-digit percent to the mid-30s", so 15 percent is inside the normal range.

### Contribution per booking

| Variable cost per booking | Arithmetic | Dollars |
|---|---|---|
| Card processing at an assumed 2.9 percent plus 30 cents of the full booking | 120 × 0.029 + 0.30 | 3.78 |
| Customer support | assumed | 1.50 |
| Insurance and trust and safety checks | assumed | 1.00 |
| Refunds and chargebacks at 0.6 percent of the booking | 120 × 0.006 | 0.72 |
| Promotional credits to buyers, averaged across bookings | assumed | 2.00 |
| Total variable cost | | 9.00 |

Contribution per booking is 18 − 9 = 9 dollars: 50 percent of revenue, but only 7.5 percent of the booking value. Card processing alone takes 3.78 / 18 = 21 percent of revenue, because the fee is charged on the full 120 dollars while the marketplace keeps 18. A cost model built only as a percent of revenue would miss it.

### Spreading the supply side across bookings

The marketplace spent 18,000 dollars to bring on 60 new cleaners, a supplier CAC of 18,000 / 60 = 300 dollars. An active cleaner completes 25 bookings a month and 4 percent of cleaners leave each month, so a cleaner's expected lifetime is 1 / 0.04 = 25 months and 25 × 25 = 625 bookings. Supply acquisition per booking is 300 / 625 = 0.48 dollars. Contribution after supply cost is 9.00 − 0.48 = 8.52 dollars per booking.

Spreading supply cost this way avoids counting each booking's contribution twice, once in a buyer LTV and again in a cleaner LTV.

### Buyer LTV, LTV to CAC and payback

The marketplace spent 200,000 dollars to acquire 4,000 new buyers, a buyer CAC of 200,000 / 4,000 = 50 dollars. An active buyer books 0.8 times a month and 6 percent of buyers stop each month, so expected lifetime is 1 / 0.06 = 16.67 months and 0.8 × 16.67 = 13.33 lifetime bookings.

| Measure | Arithmetic | Result |
|---|---|---|
| Buyer LTV on contribution after supply | 13.33 × 8.52 | 113.60 dollars |
| Buyer LTV to CAC | 113.60 / 50 | 2.27 |
| Monthly contribution per buyer | 0.8 × 8.52 | 6.82 dollars |
| Buyer CAC payback | 50 / 6.82 | 7.3 months |
| 24-month buyer LTV | 12.89 active months × 6.82 | 87.87 dollars |

The marketplace pays back faster than the SaaS product, 7.3 months against 10.7, but earns a lower multiple of CAC over the buyer's life, because its buyers churn 2.4 times as fast: 6 percent a month against 2.5.

## What does good look like in each model?

Good depends on the model, the customer segment and the source, so the table names each reference next to the number it sets. The two companies are the invented ones above.

| Metric | Invented SaaS | Invented marketplace | Published reference |
|---|---|---|---|
| Gross margin | 75 percent | not comparable (contribution is 50 percent of revenue) | Bessemer: averages of 65 to 70 percent across ARR stages for cloud companies |
| Take rate | not applicable | 15 percent | a16z Marketplace Glossary: low single digits to the mid-30s |
| LTV to CAC | 3.75 blended, 2.5 paid | 2.27 | Bessemer: invest when 3x or more; Skok: best SaaS businesses above 3; a16z: 3x within 5 years for consumer companies |
| CAC payback | 10.7 months blended, 16 paid | 7.3 months | Bessemer: under 12 months for SMB, 18 for mid-market, 24 for enterprise |

[David Skok's SaaS Metrics 2.0](https://www.forentrepreneurs.com/saas-metrics-2/) sets a stricter bar: "The best SaaS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8. And many of the best SaaS businesses are able to recover their CAC in 5-7 months." He also shows from his model that profitability "is anemic if the time to recover CAC extends beyond 12 months."

Read against those references, the SaaS product looks healthy on blended numbers and marginal on paid ones, which says the paid channel should not get a bigger budget until its CAC falls. None of the sources fetched for this guide publishes a payback benchmark for marketplaces, so judge the marketplace's 7.3 months against how long your cash can wait. Its LTV to CAC of 2.27 is under the rule of thumb in [a16z's piece on why investors care about LTV:CAC](https://a16z.com/why-do-investors-care-so-much-about-ltvcac/), where Jamie Sullivan and Alex Immerman write that "Investors often use 3x LTV:CAC as a rough benchmark of a consumer company's financial health." The lever with the most room is buyer churn.

## Which five mistakes flatter unit economics, and how do you catch each one?

Each mistake below makes the invented SaaS product look better than it is. Stack all five and a 2.17 becomes a 15.6.

### 1. Blended CAC

Dividing all spend by all new customers credits paid campaigns with customers who arrived organically. Bill Gurley names the fix in [The Dangerous Seduction of the Lifetime Value (LTV) Formula](https://abovethecrowd.com/2012/09/04/the-dangerous-seduction-of-the-lifetime-value-ltv-formula/): "If you have organic customers, they shouldn't be included in the spend calculus. They would have arrived regardless of spend." Catch it by asking for CAC split by paid and organic, as a16z's 16 Startup Metrics recommends. Here, 2,000 becomes 3,000.

### 2. Revenue LTV

An LTV built on revenue ignores the 62.50 dollars a month it costs to serve the account. a16z calls it "a common mistake" to estimate LTV "as a present value of revenue or even gross margin of the customer". In the marketplace the same mistake is worse: an LTV built on GMV is 13.33 × 120 = 1,600 dollars, which gives a fantasy ratio of 32 against a 50 dollar CAC. Catch it by asking which margin the LTV line uses.

### 3. Ignoring payment failures

A churn rate built from cancellations alone leaves out customers whose cards fail and never recover. Using 2.0 percent instead of 2.5 percent stretches lifetime from 40 to 50 months and gross profit LTV from 7,500 to 9,375 dollars. Catch it by asking whether churn counts accounts that stopped paying or only accounts that clicked cancel.

### 4. A CAC that leaves costs out

Counting only paid media gives 96,000 / 120 = 800 dollars and a payback of 4.3 months, which beats every benchmark above and is wrong. a16z lists the usual omissions: "referral fees, credits, or discounts", to which most companies should add sales and marketing salaries. Catch it by reconciling total CAC spend to the sales and marketing line in the P&L.

### 5. A lifetime nobody has observed

1 / churn on a product whose oldest cohort is 14 months old predicts a 40-month relationship nobody has seen yet. The 24-month LTV of 3,415 dollars is less than half the 7,500 dollar formula value. Catch it by asking for LTV measured on real cohorts at 12 and 24 months, and treating anything beyond that as a forecast.

Stacked together, revenue LTV on cancellation churn (250 × 50 = 12,500) over media-only CAC (800) gives 15.6. The honest paid contribution figure is 6,500 / 3,000 = 2.17.

## What is the strongest argument against trusting any LTV?

The strongest argument is that LTV's inputs move together, so changing one to improve the number changes the others. Gurley cites Tren Griffin's view that the formula's variables "are interdependent not independent", and gives the example: "If you try to raise ARPU (price) you will naturally increase churn." He adds that a more aggressive marketing push raises acquisition cost and can raise churn too, because it reaches customers of lower quality.

The answer is not to drop LTV but to use it for what it does well, comparing channels and segments measured the same way, and to make spending decisions on payback, which depends on the next 12 to 24 months rather than a lifetime forecast. That split is also why the paid and blended columns above belong on the same slide.

## Where do these numbers go next?

The numbers above feed three decisions covered elsewhere. Pricing changes move ARPA and churn together, which [AI for pricing analysis](https://builderscamp.com/guides/tools/ai-for-pricing-analysis) works through with a billing replay. Churn is the input with the biggest effect on LTV, and [AI for churn analysis](https://builderscamp.com/guides/tools/ai-for-churn-analysis) separates voluntary from involuntary churn. For products whose cost to serve varies by customer, [how to price an AI agent](https://builderscamp.com/guides/other/how-to-price-an-ai-agent) shows margin per segment, and [the paid acquisition loop](https://builderscamp.com/guides/glossary/paid-acquisition-loop) shows how payback decides whether paid growth funds itself.

Builders Camp's Business for Product Managers bootcamp runs over 1 week with 2 live sessions and 8 self-paced microlessons, and unit economics, including CAC, LTV, margins, payback and what good looks like in different models, is one of the six topics on its public syllabus.

[See the Business for Product Managers bootcamp](https://builderscamp.com/bootcamps/business-for-product-managers?utm_source=guide&utm_medium=organic&utm_campaign=unit-economics-example-saas-marketplace)

Before your next business case, put two numbers side by side on the first slide: payback on blended CAC and payback on paid CAC. If the second one fails your finance team's threshold, the case is asking for money to scale a channel that does not yet pay for itself, and it is better to say so than to be asked.

## Frequently asked questions

### How do you calculate CAC payback for a SaaS product?

Divide customer acquisition cost by the monthly gross profit one customer brings in, which is monthly revenue per account multiplied by gross margin. In the worked example, 2,000 dollars of CAC divided by 187.50 dollars of monthly gross profit is 10.7 months. Bessemer Venture Partners measures payback against gross margin-adjusted revenue for the same reason: the cost of serving the customer does not repay acquisition.

### What is a good LTV to CAC ratio?

The most cited rule of thumb is 3 or more. Bessemer recommends investing in customer acquisition when lifetime value is at least 3 times CAC, David Skok writes that the best SaaS businesses have a ratio higher than 3, and a16z describes 3x within 5 years as a rough benchmark for consumer companies. Treat it as a rule of thumb, and check which LTV and which CAC the ratio was built from before comparing.

### What is a good CAC payback period?

Bessemer's 2021 benchmarks suggest under 12 months for companies selling to small businesses, under 18 months for mid-market and under 24 months for enterprise, and report an average of 15 months for cloud companies with 1 to 10 million dollars of ARR. Skok writes that many of the best SaaS businesses recover CAC in 5 to 7 months.

### What is the difference between gross margin and contribution margin?

Gross margin subtracts the cost of delivering the product, such as hosting, third-party services and support, from revenue. Contribution margin also subtracts the other costs that grow with each customer or transaction, such as account management time, promotions, refunds and insurance. Contribution margin is the stricter number and the one a16z recommends basing LTV on.

### How is marketplace unit economics different from SaaS?

The unit is usually a transaction rather than a subscriber, revenue is only the take rate on gross merchandise value, and some variable costs such as card processing scale with the full transaction value rather than with your revenue. You also pay to acquire both buyers and suppliers, so supply acquisition has to be spread across the transactions each supplier serves.

### Should LTV use revenue or gross profit?

Use gross profit at minimum and contribution margin where you can measure it. a16z's 16 Startup Metrics calls estimating LTV from revenue or even gross margin a common mistake, because it suggests you can spend more on acquisition than you can. In the worked example, revenue LTV is 10,000 dollars against a contribution LTV of 6,500 dollars.

### Why does blended CAC overstate efficiency?

Blended CAC divides acquisition spend by every new customer, including those who arrived organically and would have come anyway. Bill Gurley writes that organic customers shouldn't be included in the spend calculus. In the example, blended CAC is 2,000 dollars and CAC on paid customers is 3,000 dollars, which moves payback from 10.7 to 16 months.

## Sources

- [Bessemer Venture Partners: Scaling to $100 Million (D'Onofrio, Ding and Atlas Editors, 2021)](https://www.bvp.com/atlas/scaling-to-100-million)
- [David Skok, For Entrepreneurs: SaaS Metrics 2.0](https://www.forentrepreneurs.com/saas-metrics-2/)
- [Andreessen Horowitz: 16 Startup Metrics (Jordan, Hariharan, Chen and Kasireddy, 2015)](https://a16z.com/16-startup-metrics/)
- [Andreessen Horowitz: Why Do Investors Care So Much About LTV:CAC? (Sullivan and Immerman, 2023)](https://a16z.com/why-do-investors-care-so-much-about-ltvcac/)
- [Andreessen Horowitz: The Marketplace Glossary](https://a16z.com/the-marketplace-glossary/)
- [Bill Gurley, Above the Crowd: The Dangerous Seduction of the Lifetime Value (LTV) Formula (2012)](https://abovethecrowd.com/2012/09/04/the-dangerous-seduction-of-the-lifetime-value-ltv-formula/)

## How this guide was made

Researched from Builders Camp's bootcamp, track and masterclass material and the sources listed on this page, drafted with AI, and fact-checked against every source cited.