Business

Unit economics, pricing, cash flow and the metrics investors ask about. 108 calculators aimed at people running something small enough that they are doing the numbers themselves.

Two of these are worth understanding together, because looked at separately they mislead. Customer acquisition cost tells you what it costs to win a customer. Lifetime value tells you what one is worth. Neither number means anything alone. The ratio is the business. A CAC of $400 is either excellent or fatal depending entirely on whether customers stay two months or four years, and plenty of companies have scaled hard on a number that was killing them.

Churn rate is the one people calculate wrong most often. Monthly churn does not multiply by twelve. 5% a month compounds to about 46% a year, not 60%, because each month’s loss comes off a smaller base. Getting that backwards makes annual forecasts look worse than reality and quarterly ones look better.

Break-even units asks for fixed costs and contribution margin separately rather than lumping them, since the useful output is not really the break-even number. It is seeing how much the break-even point moves when you change the price by a dollar.