SKILL.md

name	saas-economics-efficiency-metrics
description	Calculate and interpret SaaS unit economics — CAC, LTV, LTV/CAC ratio, payback period, net revenue retention, and magic number — to assess business health and growth efficiency.
type	component
domain	analytics
difficulty	advanced
estimated_time	25-35 min
prerequisites	north-star-metric
outputs	saas-metrics-dashboard
triggers	Calculate our unit economics What's our LTV/CAC ratio SaaS metrics analysis Are our economics healthy

Purpose

Calculate and interpret critical SaaS economics — CAC, LTV, LTV/CAC, payback period, NRR, and magic number — to assess whether the business can grow sustainably and where to invest.

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Application

Key Metrics Template

# SaaS Economics: [Product Name]
**Period:** [Quarter/Year]

## Unit Economics

| Metric | Value | Benchmark | Health |
|--------|-------|-----------|--------|
| **CAC** (Customer Acquisition Cost) | $[#] | Industry: $[#] | 🟢/🟡/🔴 |
| **LTV** (Lifetime Value) | $[#] | ≥3x CAC | 🟢/🟡/🔴 |
| **LTV:CAC Ratio** | [#]:1 | >3:1 healthy | 🟢/🟡/🔴 |
| **Payback Period** | [#] months | <12 months | 🟢/🟡/🔴 |
| **Gross Margin** | [%] | >70% SaaS | 🟢/🟡/🔴 |
| **NRR** (Net Revenue Retention) | [%] | >110% | 🟢/🟡/🔴 |
| **GRR** (Gross Revenue Retention) | [%] | >85% | 🟢/🟡/🔴 |
| **Magic Number** | [#] | >0.75 invest more | 🟢/🟡/🔴 |
| **Rule of 40** | [%] | >40% | 🟢/🟡/🔴 |

## Formulas
- **CAC** = Total Sales & Marketing Spend / New Customers Acquired
- **LTV** = ARPU × Gross Margin × (1 / Churn Rate)
- **LTV:CAC** = LTV / CAC
- **Payback Period** = CAC / (ARPU × Gross Margin)
- **NRR** = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR
- **Magic Number** = Net New ARR / Prior Quarter S&M Spend
- **Rule of 40** = Revenue Growth Rate + Profit Margin

## Interpretation
- [What's healthy and why]
- [What needs improvement]
- [Investment recommendation based on magic number]

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Quality Rubric

Dimension	0	1	2
Metrics	1-2 metrics	4-5 metrics	Full dashboard (8+ metrics)
Data Quality	Estimated	Partially calculated	Fully calculated from real data
Benchmarking	No comparison	Industry benchmark	Industry + trend over time
Interpretation	Numbers only	What they mean	What to do about them

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References

Related Skills

• skills/strategy/business-model-canvas/SKILL.md — Revenue model context
• skills/growth/growth-model/SKILL.md — Growth projections
• skills/launch/pricing-packaging-advisor/SKILL.md — Pricing affects all metrics

External Frameworks

• David Skok (Matrix Partners), SaaS metrics
• Bessemer Cloud Index — SaaS benchmarks

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Skill type: Component Domain: Analytics & Metrics