Unit economics library
Unit Economics Wiki
A founder-focused guide to acquisition, retention, margin, and capital-efficiency metrics—from CAC and LTV to burn multiple and the Rule of 40.
Use this hub to connect customer-level economics to company-level growth, then test whether scale improves or weakens the business.
A practical sequence
Start here
Follow these concepts in order for the shortest path from first principles to a usable operating decision.
- 01Available now
Customer Acquisition Cost (CAC)
Measure the fully loaded cost of acquiring a new customer for a defined segment and period.
- 02Available now
Customer Lifetime Value (LTV / CLV)
Estimate the gross profit a customer contributes over the economically relevant relationship.
- 03Available now
LTV:CAC Ratio
Compare customer value with acquisition cost without hiding timing, segment, or model risk.
- 04Available now
CAC Payback Period
Calculate how long contribution margin takes to recover acquisition spend.
The full map
Explore by decision track
Track 01
Read the customer base
Use recurring-revenue and cohort measures to see retention, contraction, and expansion clearly.
Cohort Analysis
Separate customers by start period or behavior to see retention, spend, and margin clearly.
ARR & MRR
Normalize recurring revenue while keeping bookings, usage, services, and one-time fees separate.
Churn Rate
Measure lost customers or revenue with the right denominator, interval, and cohort context.
NRR & GRR
Separate retained revenue from expansion to understand the health of the installed base.
Track 02
Measure the unit
Connect acquisition cost and customer value to the margins and timing that make growth economic.
Customer Acquisition Cost (CAC)
Measure the fully loaded cost of acquiring a new customer for a defined segment and period.
Customer Lifetime Value (LTV / CLV)
Estimate the gross profit a customer contributes over the economically relevant relationship.
LTV:CAC Ratio
Compare customer value with acquisition cost without hiding timing, segment, or model risk.
CAC Payback Period
Calculate how long contribution margin takes to recover acquisition spend.
Gross Margin
Identify the direct cost of delivering revenue and the operating leverage available at scale.
Contribution Margin
Understand what remains after the variable costs tied to serving and growing a unit.
Track 03
Capital efficiency
Judge whether the pace and quality of growth justify the cash required.
Burn Rate & Runway
Translate cash consumption into decision time under a stated operating plan.
Burn Multiple
Compare net cash burn with new recurring revenue to assess growth efficiency.
Magic Number
Relate sales and marketing spend to the recurring revenue it appears to create.
Rule of 40
Use a growth-plus-profitability heuristic with careful definitions and stage context.
Built as a living reference
Every guide sits inside a decision path.
Published concepts stay linked from their track, while future additions enter the map with the context needed to use them well.
Open license
Reuse with attribution
This content is available for reuse. When referencing or republishing it, please credit Dr. Sarah Zou and link back to the original source.
Licensed under Creative Commons Attribution 4.0 International. You may share and adapt the material with appropriate credit.