How to use this hub
Unit economics isn't one number. Use this hub to connect acquisition cost (CAC) to cash recovery (payback), then sanity-check sustainability with burn multiple and runway. Start simple, then add realism with fully-loaded costs and sensitivity analysis.
The unit economics stack (what to compute first)
| Step | Compute | Why it matters |
|---|---|---|
| 1 | CAC (and fully-loaded CAC) | True cost to acquire customers, not just ad spend |
| 2 | LTV (cohorted if possible) | Ceiling for how much acquisition you can afford |
| 3 | LTV:CAC | Quick sanity-check for profitability potential |
| 4 | CAC payback | Cash constraint lens (can you fund growth-) |
| 5 | Burn multiple + runway | Are you buying growth efficiently, and for how long- |
A fast operating workflow
- Choose a primary segment (SMB vs enterprise) and compute CAC/LTV/payback per segment.
- Use fully-loaded CAC for board-level truth; use paid CAC for channel optimization.
- Run payback sensitivity when ARPA and margin are moving (pricing, COGS, mix).
- Translate improvements into cash runway impact (growth is constrained by cash).
What 'good' looks like (rule-of-thumb, not law)
- LTV:CAC around ~3:1 is a common target; earlier-stage teams often accept lower if growth is strong and payback is short.
- Payback targets depend on cash and retention: shorter payback is safer, especially with volatile channels.
- Burn multiple trends are often more actionable than a single month's value.
Common mistakes
- Mixing gross margin and contribution margin (be consistent about variable costs).
- Using blended CAC for a single channel decision (blend hides allocation effects).
- Assuming churn stays constant after pricing changes (recompute cohorts).
- Treating LTV as precise; always scenario-test with sensitivity ranges.