SaaS Economics & Efficiency Metrics
PM-focused reference for unit economics (CAC, LTV, payback, contribution margin) + capital efficiency (burn, runway, OpEx) + ratios (Rule of 40, magic number) — with cash-trap pitfalls.
Your deck shows LTV:CAC of 6:1 — and your runway is 9 months while payback is 36. Congrats: you have a cash trap. The ratio looked great because it ignored time. SaaS economics aren't one number — they're a system, and the worst failures come from celebrating LTV without checking payback, scaling S&M with a 0.3 magic number, or confusing gross margin with contribution margin.
Who it's for: PMs preparing board decks, founders evaluating fundraise readiness, exec teams deciding scale-vs-optimize, pricing leaders modeling ROI
Example
"Evaluate our SaaS unit economics before scaling paid acquisition" → Calculate CAC ($8K), LTV ($40K, margin-weighted), LTV:CAC (5:1), Payback (10mo), Rule of 40 (55), Magic Number (0.9) → Decision: scale aggressively. Plus segment breakdown showing SMB vs. Enterprise differences
CLAUDE.md Template
New here? 3-minute setup guide → | Already set up? Copy the template below.
npx ccplaybooks add saas-economics-efficiency-metrics# SaaS Economics & Efficiency Metrics
Evaluate SaaS unit economics and capital efficiency: CAC, LTV, payback, burn, runway, Rule of 40, magic number. Decide whether the business can scale efficiently or needs correction. Essential for fundraising, board reporting, and investment trade-offs.
Not a finance reporting tool. A framework for PMs to understand viability and prioritize efficiency vs. growth.
## Three Metric Families
### Unit Economics
- **Gross Margin** = (Revenue − COGS) / Revenue. SaaS bench: 70-85%
- **CAC** = Total S&M / New Customers. Enterprise $10K+ ok; SMB <$500 target
- **LTV (better)** = ARPU × Margin% / Churn Rate. Must be 3x+ CACGet new playbooks like this one
One email a week with new Claude Code workflows. Free, like everything here.
No spam. Unsubscribe anytime.
What This Does
Walks through 3 metric families (unit economics, capital efficiency, efficiency ratios) with formulas, benchmarks, and cash-trap pitfalls. Calculates LTV with margin-and-churn formula (not naive ARPU × lifetime). Pairs LTV:CAC with payback period to avoid the most common SaaS misread.
Pairs with saas-revenue-growth-metrics, finance-metrics-quickref, and finance-based-pricing-advisor.
Quick Start
mkdir -p ~/Documents/SaaSEconomics
mv ~/Downloads/CLAUDE.md ~/Documents/SaaSEconomics/
cd ~/Documents/SaaSEconomics
claude
Provide revenue, COGS, S&M spend, customer count, churn rate, cash balance, monthly burn. Claude calculates the full metric set and flags cash traps, scaling readiness, and optimization priorities.
The Three Metric Families
| Family | Key Metrics | Decision |
|---|---|---|
| Unit Economics | Gross Margin, CAC, LTV, LTV:CAC, Payback, Contribution Margin | Is each customer profitable? |
| Capital Efficiency | Burn, Runway, OpEx, Net Income | Can we sustain growth? |
| Efficiency Ratios | Rule of 40, Magic Number, Operating Leverage | Are we balancing growth + profit? |
Tips & Best Practices
- LTV:CAC + payback together — always. 6:1 with 36mo payback is a cash trap.
- Use margin-and-churn LTV. Naive
ARPU × lifetimeoverstates by 20-40%. - Segment everything. Blended SMB+Enterprise hides which segment kills you.
- Magic Number gates S&M scaling. <0.5 = fix the engine before adding fuel.
- Rule of 40 is balance, not survival. Pair with burn rate and runway.
Common Pitfalls
- High LTV celebrated without checking payback (the cash trap)
- LTV calculated without gross margin (inflates 20-40%)
- Scaling S&M when magic number is <0.5
- Comparing channel CACs without payback periods
- Confusing gross margin with contribution margin