Unit Economics — Unit Economics Analysis Framework
A specialized skill that enhances the revenue model design capabilities of the revenue-modeler agent.
Target Agent
- revenue-modeler — Revenue stream definition, unit economics, LTV/CAC analysis
Core Unit Economics Metrics
LTV (Customer Lifetime Value)
Basic Formula:
LTV = ARPA x Gross Margin / Monthly Churn Rate
Cohort-Based LTV (More Accurate):
LTV = Sum(t=1→inf) [ARPA_t x GM x Retention_t / (1+d)^t]
ARPA_t = Average revenue per account at month t (reflecting expansion/contraction)
GM = Gross Margin
Retention_t = Retention rate at month t
d = Monthly discount rate
LTV Calculation Variants by Business Model:
| Model |
LTV Formula |
Key Variables |
| SaaS Subscription |
ARPA x GM / Churn |
Churn rate, NRR |
| E-commerce |
AOV x Annual Orders x GM x Customer Lifespan |
Repeat rate, AOV |
| Marketplace |
GMV x Take Rate x GM x Customer Lifespan |
GMV, Take Rate |
| Gaming |
ARPPU x Conversion Rate x GM / Churn |
ARPPU, Conversion Rate |
CAC (Customer Acquisition Cost)
CAC = (Marketing Cost + Sales Cost) / New Customers
Blended CAC = Total S&M / Total New Customers
Paid CAC = Paid Channel Cost / Paid Channel New Customers
Organic CAC = Overhead Allocation / Organic New Customers
CAC Payback Period
CAC Payback (months) = CAC / (ARPA x Gross Margin)
| Rating |
Benchmark |
| Excellent |
< 12 months |
| Good |
12-18 months |
| Caution |
18-24 months |
| At Risk |
> 24 months |
LTV/CAC Ratio
LTV/CAC = LTV / CAC
| Ratio |
Interpretation |
| < 1x |
Losing money on each customer acquired — immediate improvement needed |
| 1-3x |
Not sustainable — reduce CAC or improve LTV |
| 3-5x |
Healthy — can invest in growth |
| > 5x |
Potentially under-investing — can grow more aggressively |
Contribution Margin Analysis
3-Layer Margin Structure
Revenue 100%
(-) Variable Costs (COGS, shipping, transaction fees)
= Contribution Margin 1 (CM1) — Per-transaction profitability
(-) Variable Marketing (performance marketing)
= Contribution Margin 2 (CM2) — Profitability including marketing efficiency
(-) Fixed Cost Allocation (labor, infrastructure, other)
= Contribution Margin 3 (CM3) — Business unit profitability
CM Analysis by Product/Channel/Segment
| Analysis Dimension |
Purpose |
Action |
| Per-Product CM |
Which products contribute to profit? |
Price adjust/discontinue low-margin products |
| Per-Channel CM |
Which channels are efficient? |
Reallocate budget to high-efficiency channels |
| Per-Customer Segment CM |
Which customers are valuable? |
Focus on high-value segments |
Cohort Analysis Framework
Revenue Cohort Table
| Sign-up Month | M0 | M1 | M2 | M3 | M6 | M12 |
|--------------|-----|-----|-----|-----|-----|------|
| 2024-01 | 100% | 85% | 78% | 73% | 62% | 48% |
| 2024-04 | 100% | 88% | 82% | 77% | 68% | - |
| 2024-07 | 100% | 90% | 85% | 80% | - | - |
Analysis Points
- Retention Pattern Over Time: Identify stabilization point
- Cross-Cohort Comparison: Are newer cohorts improving?
- NDR/NRR Decomposition: Track expansion vs. contraction vs. churn separately
- LTV Convergence Estimation: Estimate actual LTV from cohort data
Bottom-Up Revenue Estimation
Step-by-Step Estimation Formula
Revenue = Target Market Size (SAM)
x Reachable Ratio
x Conversion Rate
x Average Order Value
x Repeat Purchase Frequency
| Step |
Estimation Method |
Validation |
| TAM |
Industry reports + government statistics |
Cross-check multiple sources |
| SAM |
TAM x Accessible segment ratio |
Clearly define actual target |
| SOM |
SAM x Realistic share |
Reference similar companies' initial share |
Unit Economics Health Scorecard
| Metric |
At Risk |
Caution |
Good |
Excellent |
| LTV/CAC |
<1x |
1-3x |
3-5x |
>5x |
| CAC Payback |
>24M |
18-24M |
12-18M |
<12M |
| Gross Margin |
<40% |
40-60% |
60-75% |
>75% |
| NDR |
<90% |
90-100% |
100-115% |
>115% |
| CM2 |
Negative |
0-10% |
10-20% |
>20% |
The revenue-modeler uses this scorecard to self-diagnose model health.
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