financial-unit-economics

Calculates CAC, LTV, contribution margin, and cohort payback to assess business model scalability.

Updated Sep 9, 2026
One-click install
npx skills add https://github.com/lyndonkl/hermesworld --skill financial-unit-economics-lyndonkl
Or copy as Structured Prompt for Agent▼
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Skill: financial-unit-economics
Source: https://github.com/lyndonkl/hermesworld/tree/main/teams/valuation/skills/corporate-finance/financial-unit-economics
Command: npx skills add https://github.com/lyndonkl/hermesworld --skill financial-unit-economics-lyndonkl

SYSTEM DOCUMENTATION & REQUIREMENTS

💡 This Skill includes references (resource) and assets (resource) components.

What problem does it solve? Determining whether a business model can profitably scale requires rigorous analysis of per-customer economics, but blended metrics, incomplete cost accounting, and unrealistic retention assumptions often produce misleading conclusions about growth readiness. ## Core Features & Use Cases - Fully-Loaded CAC and LTV Calculation: Computes customer acquisition cost including all sales and marketing costs, and lifetime value using cohort-based retention data rather than averages. - Cohort and Channel Analysis: Tracks retention curves, LTV, and payback by acquisition month, channel, and segment to identify profitable versus unprofitable growth sources. - Business Model Patterns: Provides tailored metrics, formulas, and benchmarks for SaaS subscription, e-commerce, marketplace, freemium, and enterprise sales models. - Use Case: A SaaS startup with $100/month subscriptions uses this Skill to calculate an 8:1 LTV/CAC ratio and 2.5-month payback, concluding it can aggressively scale marketing spend. ## Quick Start Analyze the unit economics of my SaaS business with $50 ARPU, 5% monthly churn, 80% gross margin, and $200 CAC, then tell me whether I should scale marketing spend.

Frequently Asked Questions about financial-unit-economics

High-intent search queries and answers about installing and using this skill.

FAQPage Schema
How do I calculate LTV and CAC for a SaaS business?▼

Calculate CAC by dividing total sales and marketing costs by new customers acquired, including salaries and tools. Calculate LTV as ARPU multiplied by gross margin percentage divided by monthly churn rate, using cohort retention data for accuracy.

What is a good LTV to CAC ratio for startups?▼

A ratio of 3:1 or higher indicates healthy unit economics that support profitable growth. Ratios below 2:1 are marginal and signal you should improve retention or reduce CAC before scaling, while ratios above 5:1 support aggressive growth.

How does unit economics analysis differ by business model?▼

SaaS uses ARPU, churn, and NRR; e-commerce uses AOV, purchase frequency, and repeat rate; marketplaces use GMV and take rate; freemium blends free user costs with paid conversion. Each model has distinct formulas and benchmark thresholds.

Why is my LTV calculation unreliable with limited data?▼

Projecting multi-year LTV from only a few months of retention data produces vanity metrics. Use observed cohort retention curves, weight recent cohorts more heavily, and cap projections at 12-18 months for new products.

What costs should be included in customer acquisition cost?▼

Fully-loaded CAC includes marketing spend, sales and marketing team salaries, commissions, tools like CRM and analytics platforms, agency fees, and overhead allocation. Excluding sales salaries is a common mistake that understates true CAC.

When should a company not scale marketing spend?▼

Avoid scaling when LTV/CAC is below 2:1 or payback exceeds 18 months, since growth would strain cash without profitable returns. Fix retention, pricing, or channel efficiency first, then scale once economics reach 3:1 with payback under 12 months.