19 April 2026
SaaS Unit Economics Every Founder Should Know
CAC, LTV, churn, MRR — understanding your SaaS unit economics is the difference between building a sustainable business and flying blind.
SaaS unit economics are the metrics that determine whether your business model is fundamentally sound. MRR (Monthly Recurring Revenue) is your core health metric — track new MRR, expansion MRR, and churned MRR separately. CAC (Customer Acquisition Cost) = total marketing spend ÷ new customers acquired. LTV (Lifetime Value) = average revenue per account ÷ monthly churn rate. The LTV:CAC ratio should be at least 3:1. Payback period = CAC ÷ monthly gross margin per customer — target under 12 months. SaaS gross margin should be 70–85%. Understanding these metrics is the foundation of every capital allocation decision you'll make as a founder.
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