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.

1. Growing the company
Unit economics example for B2B SAAS
Dr Martin J Steinmann
martin@steamfab.io

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

4. CTR Click-through-rate
CPC Cost per click
CPM Cost per thousand
impressions
PPC campaign parameters

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
martin@steamfab.io

7. Funnel Metrics
# % $
Impressions CPM: $40
Clicks 2% CPC: $2
Downloads 13%
30-day 3%
Subscription 1 20%
martin@steamfab.io

8. Funnel Metrics
# % $
Impressions CPM: $40
Clicks 2% CPC: $2
Downloads 13%
30-day 5 3%
Subscription 1 20%
martin@steamfab.io

9. Funnel Metrics
# % $
Impressions CPM: $40
Clicks 2% CPC: $2
Downloads 167 13%
30-day 5 3%
Subscription 1 20%
martin@steamfab.io

10. Funnel Metrics
# % $
Impressions CPM: $40
Clicks 1,282 2% CPC: $2
Downloads 167 13%
30-day 5 3%
Subscription 1 20%
martin@steamfab.io

11. Funnel Metrics
# % $
Impressions 64,102 CPM: $40
Clicks 1,282 2% CPC: $2
Downloads 167 13%
30-day 5 3%
Subscription 1 20%
martin@steamfab.io

12. Funnel Metrics
# % $
Impressions 64,102 CPM: $40
Clicks 1,282 2% CPC: $2
Downloads 167 13% $15.30
30-day 5 3% $512.80
Subscription 1 20% $2,564
martin@steamfab.io

13. Funnel Metrics
# % $
Impressions 64,102 CPM: $40
Clicks 1,282 2% CPC: $2
Downloads 167 13% $15.30
30-day 5 3% $512.80
Subscription 1 20% $2,564
martin@steamfab.io
10 years to
recover cost

14. Case A Case B
# % $ # % $
Impressions 64,102 CPM: $40 CPM: $45
Clicks 1,282 2% CPC: $2 3% CPC: $1.5
Downloads 167 13% $15.30 15%
30-day 5 3% $512.80 15%
Subscription 1 20% $2,564 1 25%
martin@steamfab.io

15. Case A Case B
# % $ # % $
Impressions 64,102 CPM: $40 5,926 CPM: $45
Clicks 1,282 2% CPC: $2 178 3% CPC: $1.5
Downloads 167 13% $15.30 26.6 15%
30-day 5 3% $512.80 4 15%
Subscription 1 20% $2,564 1 25%
martin@steamfab.io

16. Case A Case B
# % $ # % $
Impressions 64,102 CPM: $40 5,926 CPM: $45
Clicks 1,282 2% CPC: $2 178 3% CPC: $1.5
Downloads 167 13% $15.30 26.6 15% $10
30-day 5 3% $512.80 4 15% $67
Subscription 1 20% $2,564 1 25% $267
martin@steamfab.io

17. Case A Case B
# % $ # % $
Impressions 64,102 CPM: $40 5,926 CPM: $45
Clicks 1,282 2% CPC: $2 178 3% CPC: $1.5
Downloads 167 13% $15.30 26.6 15% $10
30-day 5 3% $512.80 4 15% $67
Subscription 1 20% $2,564 1 25% $267
martin@steamfab.io

18. Retention
Product-Market fit

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

23. CAC =
Customer Acquisition Cost
Total marketing spend
New subscribers

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

25. What is your
marketing budget?
Show me the data!

26. Monthly marketing budget
• $13,350 for campaigns (variable)
• $12,000 for headcount (somewhat fixed)
$25,350 per month for 50 new subscribers
martin@steamfab.io

27. Cohort Analysis

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

31. Making Money
One year later …..

32. LTV =
Long-term Value
MRR per customerΣ

33. LTV =
Long-term Value
Subscription price
Churn
for |x| < 1 , Infinite decreasing geometric series

34. Revenue metrics
• Subscription price is $19.95
• Monthly churn rate is 3%
LTV: $665 per subscriber
Average lifetime is 33 months
martin@steamfab.io

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

38. Capital Requirements
What is this going to cost me?

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
martin@steamfab.io
higher monthly
investment in CAC

40. CF break-even
month 48
martin@steamfab.io
unit economic
break-even
first cohort

41. martin@steamfab.io

42. martin@steamfab.io
Effect of churn

43. Max MRR =
Max MRR
New revenue per month
Churn

44. Max MRR =
Max MRR
New revenue per month
Churn
50 x $19.95
3%
= $33k=
LTV

45. $(500,000)
$(450,000)
$(400,000)
$(350,000)
$(300,000)
$(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$-
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
Capital required
$450k
martin@steamfab.io
CF break-even
month 48

46. 24 months
Unit economic
break-even
33 months
Average
life-time
48 months
Monthly cash-flow
break-even
Max capital
requirement
120 months
Cumulative
cash-flow
break-even
Timeline
martin@steamfab.io
}
Profit
Independent of investors

47. Defining Success
Is this a business worth doing or investing in?

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
martin@steamfab.io

50. $(400,000)
$(350,000)
$(300,000)
$(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$-
$50,000
$100,000
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
Case 1: Reduce churn rate from 3% to 1.5%
martin@steamfab.io
1.5 years
$100k

51. $(250,000)
$(200,000)
$(150,000)
$(100,000)
$(50,000)
$-
$50,000
$100,000
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
Case 2: Cut campaign cost in half, CAC $374
martin@steamfab.io
2 years
$250k

52. $(1,000,000)
$(900,000)
$(800,000)
$(700,000)
$(600,000)
$(500,000)
$(400,000)
$(300,000)
$(200,000)
$(100,000)
$-
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
Case 3: Grow faster - double marketing spend
martin@steamfab.io
($450k)

53. $(300,000)
$(200,000)
$(100,000)
$-
$100,000
$200,000
$300,000
$400,000
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
Case 4: Charge more - price $29.95 per month
martin@steamfab.io
2+ years
$230k

54. All 4 improvements combined
$(500,000)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
martin@steamfab.io
3 years
$250k

55. 1 & 2 & 4 combined
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
Month 1
Month 3
Month 5
Month 7
Month 9
Month 11
Month 13
Month 15
Month 17
Month 19
Month 21
Month 23
Month 25
Month 27
Month 29
Month 31
Month 33
Month 35
Month 37
Month 39
Month 41
Month 43
Month 45
Month 47
Month 49
Month 51
Month 53
Month 55
Month 57
Month 59
Month 61
Month 63
Month 65
Month 67
Month 69
Month 71
Cumula&ve Cash Flow
martin@steamfab.io
3 years
$350k

56. Our
company
Case 1
Churn
Case 2
CAC
Case 3
Capital
Case 4
Price
The one I
invest in
1&2&4
MRR $25,556 $34.314 $25,556 $51,072 $38,366 $103,058 $51,514
LTV / CAC 1.31 2.62 1.78 1.31 1.97 5.34 5.34
Months to
break-even
25.4 25.4 18.8 25.4 16.9 12.5 12.5
Capital $446,158 $357,783 $209,580 $894,391 $247,670 $229,409 $114,585
Cumulative
cash-flow
$445,952 $277,634 $126,752 $894,019 $59,562 $1,025,850 $512,326
Max MRR $33,250 $66,500 $33,250 $66,500 $49,917 $199,667 $99,833
Business summary after 4 years
Investor BootstrapHigh riskNo

57. Our
company
Case 1
Churn
Case 2
CAC
Case 3
Capital
Case 4
Price
The one I
invest in
1&2&4
MRR $25,556 $34.314 $25,556 $51,072 $38,366 $103,058 $51,514
LTV / CAC 1.31 2.62 1.78 1.31 1.97 5.34 5.34
Months to
break-even
25.4 25.4 18.8 25.4 16.9 12.5 12.5
Capital $446,158 $357,783 $209,580 $894,391 $247,670 $229,409 $114,585
Cumulative
cash-flow
$445,952 $277,634 $126,752 $894,019 $59,562 $1,025,850 $512,326
Max MRR $33,250 $66,500 $33,250 $66,500 $49,917 $199,667 $99,833
Business summary after 4 years
Investor BootstrapHigh riskNo

58. 1&2&4
$51,514
5.34
12.5
$114,585
$512,326
$99,833
$1m
capital
$515,080
5.34
12.5
$1,146,714
$5,125,299
$998,333
MRR
LTV / CAC
Months to
break-even
Capital
Cumulative
cash-flow
Max MRR
$1m investment yields 10x
martin@steamfab.io
10x
10x
+ $1m

59. Presented by SteamFab Ventures
745 Atlantic Ave
Boston, MA
www.steamfab.io
martin@steamfab.io