Unit Economics Explained for Founders (In Plain English)
LTV, CAC, payback period, and gross margin — the four numbers that determine whether a business model works. This post explains each in founder-friendly language and shows how to compute them from real early data.
Key points covered in this post
- Customer Acquisition Cost: fully-loaded, not just ad spend
- Lifetime Value: cohort-based, not aggregate average
- LTV/CAC ratio: the 3:1 rule and when it lies
- Payback period: why 12 months is the honest threshold
- Gross margin: SaaS vs. services vs. physical goods benchmarks
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