Unit Economics Analysis

Workflow

Step 1: Identify Business Model

Determine the revenue model to tailor the analysis:

• SaaS / Subscription: ARR, net retention, cohorts
• Recurring services: Contract value, renewal rates, upsell
• Transaction / usage-based: Revenue per transaction, volume trends, take rate
• Hybrid: Break down by revenue stream

Step 2: Core Metrics

ARR / Revenue Quality

• ARR bridge: Beginning ARR → New → Expansion → Contraction → Churn → Ending ARR
• ARR by cohort: Vintage analysis — how does each annual cohort retain and grow?
• Revenue concentration: Top 10/20/50 customers as % of total
• Revenue by type: Recurring vs. non-recurring vs. professional services
• Contract structure: ACV distribution, multi-year %, auto-renewal %

Customer Economics

• CAC (Customer Acquisition Cost): Total S&M spend / new customers acquired
• LTV (Lifetime Value): (ARPU × Gross Margin) / Churn Rate
• LTV:CAC ratio: Target >3x for healthy businesses
• CAC payback period: Months to recover acquisition cost
• Blended vs. segmented: Break down by customer segment (enterprise vs. SMB vs. mid-market)

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