Methodology: Solo Founder Unit Economics

1. Scope

Computes LTV, CAC, payback, and break-even customer count for a solo founder whose acquisition is mostly organic (content, community, SEO). It does not assume venture-stage CAC or enterprise contract structures.

2. Inputs and outputs

Inputs

arpu number (currency/mo)
grossMargin percent default: 85

Typical for micro-SaaS.
monthlyChurn percent
paidCac number (currency) default: 0

Blended acquisition cost per paying customer.
hoursPerMonth number default: 0

Founder hours spent on acquisition activities.
hourlyRate number (currency) default: 0

Opportunity cost for organic CAC.

Outputs

ltv

arpu × grossMargin / monthlyChurn.
cac

paidCac + (hoursPerMonth × hourlyRate) / customersPerMonth.
paybackMonths

cac / (arpu × grossMargin).
ltvCacRatio

ltv / cac.

Engine source: src/lib/solo-founder-unit-economics/engine.ts

3. Formula / scoring logic

ltv           = (arpu * gross_margin) / monthly_churn
organic_cac   = (hours_per_month * hourly_rate) / customers_per_month
cac           = paid_cac + organic_cac
payback       = cac / (arpu * gross_margin)
ltv_cac_ratio = ltv / cac

4. Assumptions

Churn is constant. Cohort-level LTV is more accurate but requires at least 6 months of data the tool does not request.
Organic CAC monetises founder time — zero paid CAC is not zero CAC.
ARPU is the monthly-recurring component; one-time revenue is out of scope.

5. Data sources

OpenView SaaS Benchmarks 2024 as of 2024
Paddle SaaS Benchmarks 2024 as of 2024

6. Known limitations

LTV formula assumes memoryless churn and no expansion revenue. If existing customers are expanding (NDR > 100%), the result understates true lifetime value.
Organic CAC is sensitive to hourly rate. A founder's real opportunity cost may be their day-job rate, a market freelance rate, or zero — the tool takes it at face value.
Benchmarks from OpenView/Paddle are B2B-SaaS weighted; B2C products and prosumer tools typically carry 2–3× the churn.

7. Reproducibility

Input
arpu = $25, grossMargin = 90%, monthlyChurn = 4%, paidCac = $0, hours = 10, hourly = $50, customers/mo = 5.

Expected output
ltv = $562.50, organic_cac = $100, cac = $100, payback ≈ 4.4 months, ltv:cac = 5.6×.

8. Change log

2026-04-24 methodology page first published.