Essay

SaaS Metrics 2.0: A Guide to Measuring and Improving What Matters

David Skok · For Entrepreneurs Free Intermediate

This is the piece nearly every other CAC explainer is quoting from, so go to the source. Skok walks through how CAC, lifetime value, and the payback period actually relate, and gives you concrete targets (aim for LTV at least 3x CAC, and try to recover CAC within 5 to 12 months) so you can set a number before you have any real data. It is dense, but it is the honest founder-level breakdown, not a hype piece.

  • Your target is a ratio, not a single figure: lifetime value should be roughly 3x or more of what it costs to acquire a customer.
  • Watch the payback period separately from the ratio: recovering CAC in under a year keeps you from bleeding cash while you grow.
  • Before a single sale you can back into a target CAC from your expected margin and how long a customer is likely to stay.
Open on forentrepreneurs.com ↗

It answers 4 questions

  1. How do I calculate my target CAC before I've made a single sale?
  2. My CAC looks great but I paid for it with a founder-led discount. How do I know my unit economics without the promo?
  3. Do I need to understand accrual accounting and things like deferred revenue, or is cash-basis enough for a SaaS just starting out?
  4. How do I actually measure whether a launch worked, beyond the vanity upvotes and traffic spike?

Read with it

  1. The nuanced counterweight: PMF isn't a single binary moment, it can be lost, and 'market' is doing more work than founders... a16z.com Article · ~20 min read 12 Things About Product-Market Fit Andreessen Horowitz (a16z)
  2. The reference primer on the metrics and market-sizing logic investors use, including bottom-up market sizing that keeps... a16z Article · ~15 min read 16 Startup Metrics Andreessen Horowitz (a16z)
  3. The origin text for the modern MVP and validated-learning vocabulary every founder now uses. Read it for the mental model that... theleanstartup.com Book · ~330 pages The Lean Startup Eric Ries
  4. The definitive talk that reframes launching from a one-shot event into a repeatable tactic, exactly this category's thesis. YC... YC Startup Library Video · ~25 min How to Launch (Again and Again) Kat Manalac (Y Combinator)
  5. When there is no category report to point at, you have to build the number yourself, and this is the essay that teaches you... Andreessen Horowitz Essay · ~20 min read 16 More Startup Metrics Anu Hariharan, Frank Chen, Jeff Jordan
  6. PostHog gives you product analytics and session replay in one place, so you can see both what people did (events, funnels) and... posthog.com Tool PostHog PostHog
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