kienbui1995 Financial Modeling
When to Use
When evaluating whether a business decision makes financial sense — new product, pricing change, market expansion, or funding round preparation.
Core Jobs
1. Unit Economics
For a SaaS or marketplace, calculate:
- CAC (Customer Acquisition Cost) = Total sales & marketing spend / New customers acquired
- LTV (Lifetime Value) = ARPU × Gross Margin % × Average Customer Lifetime
- LTV:CAC Ratio — healthy = 3:1 or better
- Payback Period = CAC / (ARPU × Gross Margin %) — target < 12 months
2. Revenue Projections
Build a bottoms-up model:
New MRR = New customers × ARPU
Expansion MRR = Existing customers × upsell rate × upsell ARPU
Churned MRR = Churning customers × their ARPU
Net New MRR = New + Expansion - Churned
3 scenarios: pessimistic, base, optimistic (vary growth rate assumption)
3. Cost Structure
Fixed: salaries, infrastructure, office Variable: hosting (per user), payment processing fees, customer support cost per ticket Model cost per unit at different scale points (100, 1K, 10K customers)
4. Break-Even Analysis
Break-even = Fixed costs / (Revenue per unit - Variable cost per unit) When does the model become profitable at current growth rate?
5. Sensitivity Analysis
Identify the top 3 assumptions that most affect the outcome:
- If churn is 5% vs 10%: how does LTV change?
- If CAC is 2x: when does payback period exceed 18 months? Show a sensitivity table for each key assumption.
Key Outputs
- Unit economics dashboard (CAC, LTV, payback)
- 3-scenario revenue projection (12–24 months)
- Break-even analysis
- Sensitivity table on key assumptions
Anti-Patterns
- Top-down TAM projections without bottoms-up validation
- Ignoring churn in LTV calculations
- Single-scenario models (no pessimistic case)
- Not stress-testing assumptions