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Money, pricing & model

Unit economics & modeling

Know what a customer costs and earns.

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What are unit economics and why do they matter? Unit economics is the profit or loss on a single customer or unit, strip away the noise and ask 'do I make money on one customer?' If the answer is... Beginner 3 resources → How do I calculate CAC (customer acquisition cost) and LTV? CAC = total sales and marketing spend divided by new customers acquired in that period, count everything, not just ad spend. LTV = the profit (not ... Intermediate 3 resources → What is a good LTV to CAC ratio? The rule of thumb is LTV:CAC of at least 3:1, earn back roughly three times what it costs to acquire a customer. Below 1:1 you lose money on every ... Intermediate 3 resources → What metrics should I actually track as an early-stage SaaS founder? Early on, obsess over MRR growth, churn, gross margin, and CAC payback, ignore vanity metrics like downloads and pageviews. Net revenue retention t... Intermediate 3 resources → How do I build a simple financial model or revenue projection? Build bottom-up from real drivers, leads, conversion rate, price, churn, not top-down from 'we'll grab 1% of a huge market.' A useful early model f... Intermediate 3 resources → What is churn and how much churn is too much? Churn is the rate customers leave, and it silently caps your growth because you're refilling a leaky bucket. For SMB SaaS, ~3-5% monthly is common ... Intermediate 2 resources → My CAC looks great but I paid for it with a founder-led discount. How do I know my unit economics without the promo? Discounts and founder hustle hide your real acquisition cost, so run two versions: the promo number and the number when a stranger buys at list pri... Intermediate 2 resources → My business has a big upfront cost per customer that pays back over months. How do I model CAC payback period so I don't run out of cash? CAC payback is how many months of contribution margin it takes to earn back what you spent acquiring a customer, and it directly drives how much ca... Advanced 3 resources → How do unit economics differ when I'm building for Indian customers versus selling in dollars to global users? Indian pricing power is lower and payment costs, GST, and support expectations shift your margins, so a model that works at 50 dollars a month can ... Advanced 3 resources → How do I model unit economics for a marketplace where I have to acquire both supply and demand? A marketplace has two CACs (one for each side) and its economics only work when the take rate on transactions eventually covers both, so you must m... Advanced 3 resources → Investors keep asking about my "magic number" and payback efficiency. What are these and do they matter at my stage? The magic number measures how much new recurring revenue each rupee of sales and marketing generated, and it's really a sales-efficiency check that... Advanced 2 resources → My unit economics work on a spreadsheet but I'm bleeding cash every month. Why the disconnect and what do I fix first? Positive unit economics per customer can still coexist with a cash crunch because fixed costs (salaries, tools, rent) and the timing gap between sp... Intermediate 3 resources →

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