Business Intermediate

01  Unit Economics

Unit economics is where judgment meets arithmetic. The grader checks both: your numbers have to be right AND your read of them has to be sound. A channel isn't 'good' because it brings sales; it's good when a customer earns back more than it cost to acquire.

Step 1 / 2

A paid channel has: CAC = $40, ARPU = $8/month, gross margin = 70%, monthly churn = 5%. Estimate customer lifetime (months), LTV (gross-margin based), the LTV:CAC ratio, and whether this channel is viable. Show your working.

Hints
  • Average lifetime (months) is roughly 1 / monthly churn.
  • LTV = ARPU x gross margin x lifetime.
  • A common viability bar is LTV:CAC of about 3 or higher.
A hidden rubric scores your answer with Claude.