The eight metrics that define whether a business works at the unit level - formulas, benchmarks, and what investors are actually looking for when they ask about each one.
CAC captures the fully-loaded cost of winning a new customer. Include salaries, ad spend, tools, events, and agency fees. Founders often undercount by excluding founder time or SDR salaries - that produces a flattering but useless number.
LTV estimates how much revenue a customer generates over their lifetime with you, after accounting for the cost of delivering the product. Gross margin matters here - $10K in revenue from a customer with 30% margins is worth far less than $10K at 80%.
The single most referenced unit economics metric in a VC pitch. It answers: for every dollar spent acquiring a customer, how many dollars come back? A ratio of 3x means you get $3 of LTV for every $1 of CAC - enough margin to cover overhead and generate profit.
How many months until you've recovered the cost of acquiring a customer. This is a cash flow metric, not a profitability metric. A 24-month payback with 5% monthly churn means you'll never fully recover CAC - churn will cut customers before they pay back.
The percentage of revenue left after delivering the product. High gross margins are what make SaaS businesses attractive - the marginal cost of serving an additional customer approaches zero, so most incremental revenue drops to the bottom line.
NRR measures whether your existing customer base is growing or shrinking in revenue terms, independent of new sales. An NRR above 100% means you could stop acquiring new customers entirely and still grow - expansion from existing accounts offsets any churn.
The rate at which customers or revenue leaves the business. Revenue churn matters more than customer churn - losing your largest account is far more damaging than losing 10 small ones. Negative revenue churn (where expansion > churn) is the goal.
A go-to-market efficiency metric that tells you how much new ARR you generate per dollar of sales and marketing spend. Most useful after you have 4+ quarters of ARR data and a consistent sales motion. Less relevant pre-product-market fit.