The Founder's Guide to Unit Economics

By Priya Sharma — Jan 6, 2026

Unit economics tell you whether your business model actually works. Revenue growth can mask a broken model for a while.

Customer Acquisition Cost (CAC)

CAC is the total cost of acquiring one new customer. A healthy SaaS startup should see CAC trending down over time.

Lifetime Value (LTV)

LTV is the total revenue you expect from a customer over their entire relationship with you.

The LTV:CAC Ratio

Investors want to see LTV:CAC of at least 3:1.