The document discusses unit economics and metrics for a B2B SaaS company. It provides examples of key metrics like customer acquisition cost (CAC), lifetime value (LTV), monthly recurring revenue (MRR), and cash flow over time. It analyzes the company's funnel metrics, revenue, costs, profitability, and capital requirements under different scenarios to determine how changes could impact the business model. The document aims to help the CEO understand how to improve the unit economics and determine if the business is viable and worth investing in further.
2. @SteafFab Ventures we know that innovation can be taught and
learned. We support international startups in their quest to acquire
customers and grow. We help you enter the U.S. market, attract a
round of financing, extend the team, and acquire customers. We
know how to create companies and our mission it top make you
succeed.
martin@steamfab.io
Martin J Steinmann, Ph.D.
martin@steamfab.io
www.steamfab.io
3. A specific example:
You are the CEO of a B2B company
• You sell a SAAS solution with a subscription business model
• You got $2m seed financing
• You launched an MVP as a mobile app
• You figured out how to attract customers
• You are told that for an A-round you need $100k MRR
martin@steamfab.io
5. CTR Click-through-rate
CPC Cost per click
CPM Cost per thousand
impressions
PPC campaign parameters
1.9%
$2
$38
Average values for search ads
6. Top of funnel metrics look like this
• Your CTR is 2% on search ads
• 13% download the app
• Day-3 retention is 5%
• 30 day retention is 3% (free tier)
• 20% buy a subscription @ $19.95/mo
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19. Retention Curves for Android Apps
Average D3 retention is 23%
Average D30 retention is 10%
Average D90 retention < 5%
Average Retention Curve for Android Apps
20. Retention Curves for Android Apps
Average D3 retention is 23%
Average D30 retention is 10%
Average D90 retention < 5%
Average Retention Curve for Android Apps
our company
21. Retention Curves for Android Apps
Average Retention Curve for Android Apps
1.5 million apps
our company
22. Retention Curves for Android Apps
Average Retention Curve for Android Apps
1.5 million apps
Bending the curve happens via
activation, not notification spam
24. CAC Metrics
• $267 per subscriber for campaigns
• Total headcount cost per month fully loaded: $12,000 (director and manager)
• 50 new subscribers per month
CAC = $267 + $240 = $507
martin@steamfab.io
remember that
number
26. Monthly marketing budget
• $13,350 for campaigns (variable)
• $12,000 for headcount (somewhat fixed)
$25,350 per month for 50 new subscribers
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28. Cohorts are groups of people tracked over time
oldest cohort
newest cohort
29. Cohorts are groups of people tracked over time
oldest cohort
newest cohort
today
30. Key metrics
The key metrics you need to understand are inside your product. Post
conversion user behavior drives most (all) of your success factors.
It’s about the product, stupid!
martin@steamfab.io
34. Revenue metrics
• Subscription price is $19.95
• Monthly churn rate is 3%
LTV: $665 per subscriber
Average lifetime is 33 months
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35. Profitability metrics
• Subscription price is $19.95
• Monthly churn rate is 3%
• LTV is $665
• Average lifetime is 33 months
• Months to recover CAC: 25
• LTV / CAC ratio: 1.3
martin@steamfab.io
36. Profitability metrics
• Subscription price is $19.95
• Monthly churn rate is 3%
• LTV is $665
• Average lifetime is 33 months
• Months to recover CAC: 25
• LTV / CAC ratio: 1.3
martin@steamfab.io
Profitable on a
unit economic basis
37. Profitability metrics
• Subscription price is $19.95
• Monthly churn rate is 3%
• LTV is $665
• Average lifetime is 33 months
• Months to recover CAC: 25
• LTV / CAC ratio: 1.3
Investor benchmark
martin@steamfab.io
39. Cash-flow metrics
• Months to recover CAC: 25, monthly
cash-flow for a cohort turns positive
after 25 months
• Cumulative negative cash-flow
continues to accumulate
• Investing more does not shorten the
time to break-even, but deepens the
hole
Impact of faster growth on cash-
flow and capital requirements
Cumulativecash-flow
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higher monthly
investment in CAC
48. Business summary
• After 4 years we reach $25,000 MRR and our monthly cash flow breaks even
• We have 1,281 paying customers
• We spent a total of $1.2m on marketing (campaigns & team)
• We made $771k in total revenue
• We spent $450k in capital to finance growth (ex. R&D, G&A)
• Growth curve flattens out: Max MRR is $33k
martin@steamfab.io
49. What would make this better?
Sensitivity analysis
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