Emma

[Jay Nathan @jaynathan]

People talk about ‘unit economics’ all the time in SaaS.

But what is it?

Here’s a layperson’s definition:

Unit economics is figuring out how much money you’ll make or lose every time you sign up a new customer.

Why is this important?

To determine how profitable your company can be in the long run. Or if it can even be a viable business at all.

Unit economics take into account a number of factors, like…

1/ Revenue

The amount customers pay you for your product.

2/ Gross Profit

The amount of revenue left over after cost of goods sold (COGS) are subtracted from revenue.

(In SaaS COGS include product infrastructure and hosting costs as well as the salaries of support, services, and success teams.)

3/ Gross Retention Rate

The rate at which we retain customer revenue over a period of time, typically a quarter (annualized) or a year.

4/ Customer Acquisition Cost

How much we spend in marketing and sales to land a dollar of new customer ARR.

The classic unit economics metric is LTV:CAC.

Again in laypeople terms…

How much (gross) profit do we make across the life of a paying customer versus how much we spent to acquire them in the first place.

In SaaS we need this ratio to be 3-5x. Or even higher.

(this metric has some serious limitations, but more on that later…)

Interestingly, none of this accounts for customer expansion sales which can catapult unit economics into the stratosphere.

I write about the business aspects of SaaS so that leaders in sales, marketing, customer success, and product development can level up as leaders.

In this weekend’s GrowthCurve newsletter I’ll dive deep into unit economics.

https://t.co/Umtsv0Xmm0

What thoughts and questions do you have about SaaS unit economics?

#saas #sales #marketing #product

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[DrElaineMa @DrElaineMa]

146 more Covid vaccine doses at SLC right now. Come and get your booster now! 84 days since second dose and age 18+.

[Emma @emma_lo1]

Finally pulled the trigger and joined the app. Pretty please 🙏 anybody has a spare invitation? #clubhouseinvite

[Emma @emma_lo1]

Looking for a #Clubhouse invitation...please 🙏feelings left out from a lot of great conversations. Thank you!

[Emma @emma_lo1]

@SJA_Kinder124

[Emma @emma_lo1]

@SJA_Kinder124 We included the tree Vinaay made last year. Jett and Vinaay love them! Thank you!!

[Emma @emma_lo1]

@SJA_Kinder124 we babysat our friend’s dog and it was the highlight of the weekend!

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[Emma @emma_lo1]

@CKWS_Jonna @CKWS_TV Hi @CKWS_Jonna, MaxSold is hosting the business liquidation online auction for Family FunWorld. Would you be interested in following up with the story?

[Amy @Ojisanamy]

#BoycottMulan
1998 animated Mulan: fight for the defenceless
2019 live action Mulan: oppress the defenceless

[Katie Kung @katiekung.bsky.social @cud_be_worse]

#boycottMulan
Whoever supports police brutality and sexual abuse is no Mulan.

[Emma @emma_lo1]

webinar with #ashleyStahl