Your Marketing Either Makes Money or It Doesn't — Here's the Sheet That Tells You

Prabhash Jha
1 day ago
4 min read

You can have a rising click-through rate, a busy dashboard and a full content calendar — and still lose money on every customer you acquire. Marketing reports are excellent at showing activity and terrible at answering the only question that matters: does this make money? Here's a free sheet that answers it in about five minutes.

The two numbers that decide everything

Strip away the dashboards and paid marketing comes down to two numbers: what a customer is worth to you over their lifetime (LTV), and what it costs you to get one (CAC). If the first is comfortably bigger than the second, you have something you can scale. If it isn't, every rupee you add makes the problem bigger, faster.

Everything else — impressions, reach, CTR, engagement — is diagnostic detail. It's useful for working out why something isn't working. It's useless for deciding whether it's working.

Profit = (LTV − CAC) × Volume. Fix what's inside the bracket before you touch the volume.

What the sheet works out for you

You fill in seven things you already roughly know:

Average order value — what a customer pays you per purchase.
Gross margin — what's left after the cost of delivering it.
Purchase frequency — how often a customer buys in a year.
Customer lifespan — how long they keep buying.
Monthly ad spend — everything you pay the platforms.
Other acquisition costs — agency fees, tools, salaries tied to acquisition.
New customers per month — customers, not leads or clicks.

And it gives you back:

LTV — the total gross profit one customer brings you.
CAC — what one new customer actually costs.
LTV : CAC ratio — the single most useful number in the sheet.
Break-even ROAS — the return you need just to cover product cost.
Actual ROAS — what you're getting today on the first purchase.
Payback period — how many months until a customer repays what you spent.
Maximum affordable CAC — the ceiling you should never bid past.

How to read your answer

Below 1:1 — you're buying losses. Every new customer costs more than they'll ever be worth. Scaling makes it worse, faster.
1:1 to 3:1 — it works, but there's no room for error. One bad month or one rising CPM breaks it.
3:1 and above — healthy. This is where scaling actually compounds. Increase budget in steps, not leaps.
Well above 5:1 — you may be under-spending. That's a good problem, but it's still a problem — you're leaving growth on the table.

The two mistakes that make your numbers lie

Counting leads instead of customers. A lead is not a customer. If you divide your spend by leads instead of paying customers, your CAC will look roughly a third of what it really is, and every decision downstream of it will be wrong.

Leaving out the costs that aren't ad spend. Agency fees, tools, and the salaries of the people running acquisition are all part of what it costs you to get a customer. Leave them out and your numbers will look considerably better than your bank account does.

A worked example

Say a business sells at 2,000 per order on a 60% gross margin. A customer buys twice a year and stays for three years. It spends 300,000 a month on ads plus 50,000 on tools and people, and that brings in 120 new customers.

The sheet returns an LTV of 7,200 and a CAC of about 2,917 — a ratio of 2.5:1, under the 3:1 you want. First-purchase ROAS is 0.8x against a break-even of 1.67x, so every first sale loses money. Payback takes roughly 14.6 months.

Nothing there looks alarming on a dashboard. The ads are running, customers are arriving, revenue is growing. But that business is funding its own growth out of pocket for more than a year per customer, and it cannot afford to scale until margin, retention or conversion improves. That's the kind of thing this sheet surfaces in five minutes and a dashboard can hide for a year.

Illustrative numbers only — not a real account.

Get the sheet

Download The Unit Economics Sheet — free, no signup required. It works in Excel, Google Sheets and Numbers. Fill in the yellow cells; everything else calculates itself, including the verdict.

FAQs

What if I don't know my numbers exactly?

Estimate them. A rough number beats no number, and the answer is usually obvious well before the decimals matter. If you're not sure of your margin, use your best guess and check whether the verdict changes when you move it a few points either way.

What counts as a good LTV:CAC ratio?

3:1 is the common benchmark, but it depends on your margins and how fast you get paid back. A business with fat margins and quick repeat purchases can live at 2:1. A thin-margin business with a year-long payback may need more than 3:1 to be genuinely safe.

Does this work for services and freelancers?

Yes. Average order value becomes your typical project fee or monthly retainer, purchase frequency becomes how often a client re-engages, and lifespan is how long they stay. The maths doesn't care what you sell.

Key takeaways

Only two numbers decide whether marketing works: LTV and CAC. Everything else explains them.
Profit = (LTV − CAC) × Volume. Fix the bracket before you scale the volume.
Count paying customers, not leads — and include the costs that aren't ad spend.
Below 3:1, improve the funnel. Above 3:1, scale in steps.
A business can look healthy on a dashboard and still be losing money on every customer.