Unit Economics Analysis Template (CAC, LTV, Payback, Cohorts)

Unit Economics Analysis: [Business or segment name]

Analysis of the economics of one unit of the business (a customer, a subscription, an order or a location): revenue per unit, variable cost and contribution, customer acquisition cost (CAC) by channel, retention by cohort, customer lifetime value (LTV), payback period, sensitivities and the actions that follow. Written as original practice guidance for finance, growth and investor teams; no accounting standard defines these measures, so each one must carry its own definition. Where unit metrics are published as key performance indicators, the SEC Commission Guidance on MD&A (Release 33-10751, 2020) sets expectations on definition, reason for use and consistency. Measures that are non-GAAP financial measures or alternative performance measures (for example contribution or adjusted margins) also fall under SEC Regulation G (17 CFR Part 244) and the ESMA Guidelines ESMA/2015/1415; operating and statistical measures such as customer counts and churn rates do not. Requirements are referenced by number; obtain the rule for the normative text. Replace every [bracketed] value and every row marked Example. This is a document format, not financial, investment, tax, legal or accounting advice.

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Revision history

Contents

1. Summary and conclusions
2. Business model, unit definition and conventions
3. Revenue per unit
4. Variable cost and contribution
5. Customer acquisition cost by channel
6. Retention and cohorts
7. Lifetime value
8. Payback period
9. Sensitivities and scenarios
10. Reconciliation to the financial statements
11. Actions and targets
12. Data quality and limitations
13. Glossary and references

1. Summary and conclusions

Example conclusions:

• A new subscription customer repays its acquisition cost in 19.2 months and returns 2.37 times its CAC over five years on a discounted basis (4.50 times without the five-year cap). The platform should keep investing in acquisition.
• Channels differ: partner and event channels repay in about 16 months; paid search takes 24 months and is the first channel to cap if budget tightens.
• A new commerce customer acquired through performance marketing at EUR 45 returns only EUR 33.40 of discounted contribution over three years. Commerce acquisition spend should be cut or redirected to consumables, where repeat purchase is higher.
• The FY2027 budget assumes subscription CAC of EUR 15.6k or less and commerce acquisition spend held flat; section 11 proposes a CAC ceiling of EUR 33 for commerce.

2. Business model, unit definition and conventions

2.1 Business model

[Describe the revenue streams, pricing model, sales motion and the cost structure.]

Example: Corvid sells a subscription commerce platform to merchants (annual contracts, billed annually in advance, priced per store and transaction tier) and runs its own online store for hardware and consumables. Subscription customers are acquired through paid search, a partner programme, outbound sales and events. Commerce customers are acquired mainly through performance marketing. Professional services (implementation) are sold with the platform and are not analysed as a separate unit.

2.2 Unit definitions

2.3 Conventions

3. Revenue per unit

3.1 Subscription

FY2027 note: the FY2027 budget assumes larger new contracts (outbound and partner-led deals, plus the price action in UE-ACT-002), so its new ARR of EUR 14,500k comes from about 800 new customers at about EUR 18.1k each (Annual Budget ASM-007), and Q1 2027 delivered EUR 3,900k from 215 new customers (EUR 18.1k; Monthly Management Report section 2.1). This analysis uses FY2026 actuals at EUR 13.0k; refresh the LTV and payback figures on the FY2027 mix before using them to set FY2028 acquisition budgets.

3.2 ARR movement FY2026

Gross ARR churn = (600 + 2,800) / 78,000 = 4.4%. Net revenue retention = (78,000 + 3,600 - 600 - 2,800) / 78,000 = 100.3%.

3.3 Commerce

4. Variable cost and contribution

4.1 Subscription customer, per year (new customer)

Check: 1.43 + 0.26 + 0.91 = 2.60 = 20% of 13.00; 10.40 - 0.65 = 9.75.

4.2 Commerce order

Check: 26.10 + 2.25 + 3.15 = 31.50; 45.00 - 31.50 = 13.50, the 30% gross margin used in the budget; 13.50 - 0.90 - 2.70 - 1.35 = 8.55.

Classification note: payment processing sits above gross margin for subscription (it is in subscription cost of sales in the ledger) but below gross profit for commerce (it is in commerce selling expense). The contribution figures are unaffected, but gross margins of the two units are not comparable line by line. Follow the ledger classification so section 10 reconciles, and state the difference wherever the two margins appear side by side.

5. Customer acquisition cost by channel

Allocation rules: [state how shared sales and marketing cost is split between acquisition, retention and brand]. Example: staff cost by time study; brand spend split 50/50 between acquisition and retention; account management and renewals excluded from CAC.

5.1 Subscription

Checks: spend 2,700 + 1,800 + 3,910 + 950 = 9,360; 9,360 / 600 = 15.6; weighted ARPA (180 x 10.0 + 150 x 12.0 + 170 x 19.0 + 100 x 9.7) / 600 = 7,800 / 600 = 13.0. Payback uses the 75% contribution margin (section 8).

5.2 Commerce

6. Retention and cohorts

6.1 Subscription cohort logo retention

Reading: twelve-month logo retention is stable at about 95%, consistent with the annual logo churn used for LTV:

Retention rate r = 1 - c = 94.74%.

6.2 Commerce repeat purchase

Expected orders per new customer: year 1 = 2.4; year 2 = 0.45 x 3.0 = 1.35; year 3 = 0.45 x 0.60 x 3.0 = 0.81; total 4.56 orders over three years.

7. Lifetime value

7.1 Formulas

For contribution m received at the start of each year, retention r and discount rate d, the uncapped discounted lifetime value is:

With a horizon of N years:

7.2 Subscription customer

Inputs: m = EUR 9.75k, r = 94.74%, d = 10%, N = 5.

Uncapped: LTV = 9.75 x 1.10 / (1.10 - 0.9474) = 10.725 / 0.1526 = EUR 70.27k. The five-year figure is the decision measure; the uncapped figure is shown for comparison with external benchmarks only.

7.3 Commerce new customer

Contribution received at the end of each year, d = 10%, horizon 3 years.

LTV / CAC = 33.40 / 45.00 = 0.74x. Undiscounted, the ratio is 38.99 / 45.00 = 0.87x: even before the time value of money, a new commerce customer does not repay acquisition within three years.

8. Payback period

Churn-adjusted check: the first 12 months recover 12 x 0.8125 = 9.75; the remaining 5.85 is recovered at 0.8125 x 0.9474 = 0.7697 per month, taking 7.6 months, so payback = 19.6 months.

Commerce payback is not reached within the three-year horizon (cumulative undiscounted contribution EUR 38.99 against CAC EUR 45.00).

Cash implication: [state the working capital or funding needed while CAC is being repaid]. Example: annual billing in advance means the subscription customer pays EUR 13.0k on day one, so on a cash basis the first-year contribution of EUR 9.75k is received upfront and the second annual invoice (cumulative EUR 18.99k) repays CAC at month 12, against 19.2 months on an accrual basis; the 13-week and rolling forecasts use cash timing.

9. Sensitivities and scenarios

9.1 Subscription, one input at a time

Break-even CAC at an LTV / CAC hurdle of [1.5x] on the five-year basis: 36.97 / 1.5 = EUR 24.6k. Outbound sales (CH-003, CAC EUR 23.0k) is closest to the limit, but its larger starting ARPA keeps its own payback at 19.4 months.

9.2 Commerce

Check for SEN-102: year 1: 20.52 / 1.10 = 18.65; year 2: 1.65 x 8.55 = 14.11, / 1.21 = 11.66; year 3: 0.99 x 8.55 = 8.46, / 1.331 = 6.36; total 36.67.

9.3 Scenario: combined downside

Example: subscription CAC +20% with churn +2 points: LTV 5-year EUR 35.67k / CAC EUR 18.72k = 1.91x, payback 23.0 months. Acquisition remains value-creating above the 1.5x hurdle but cash payback lengthens; the rolling forecast trigger on US churn (TRG-002 in finance/rolling-forecast) would pause US sales hiring before this point.

10. Reconciliation to the financial statements

Tolerance: [1% of the line or EUR 250k]. Investigate and explain anything above it before using the analysis.

If unit metrics are published (investor presentations, MD&A, prospectus), define each measure, explain why it is useful, keep the method consistent between periods and disclose any change; reconcile financial measures to the closest framework line item. Release 33-10751 sets the expectations for KPIs (definition, reason for use, consistency); measures that are non-GAAP financial measures or APMs, such as contribution or adjusted margins, also fall under SEC Regulation G for SEC registrants, including foreign private issuers subject to the 244.100(c) conditions, and under the ESMA APM Guidelines (paragraphs 20 to 44). Customer counts, churn rates and other operating or statistical measures are outside Regulation G (244.101(a)(2)) and the ESMA Guidelines (paragraph 19). Operating metrics are defined once in Metric Definition (data/metric-definition).

11. Actions and targets

Targets carried into Annual Budget (finance/annual-budget) and Rolling Forecast (finance/rolling-forecast) must use the same definitions as this analysis.

When you turn a ratio into a target, check that the owner can move it. A blended LTV to CAC target mixes pricing, retention and acquisition efficiency, which sit with different people; set the target on the component each owner controls (starting price, channel CAC, cohort retention) and keep the blended ratio as the outcome the executive team watches. Review the targets each time the cohort data is refreshed, and retire a target once the underlying behaviour has changed, for example after a move to larger contracts that changes the starting price for new customers. Document every target change in the revision history so that trends remain comparable.

12. Data quality and limitations

Data lineage, owners and quality checks for the source tables follow Data Contract (data/data-contract) and Data Quality Standard (data/data-quality-standard).

13. Glossary and references

13.1 Glossary

13.2 References

Standard and licence note

Structure aligned with common financial planning and growth analysis practice for unit economics; no accounting standard defines CAC, LTV or payback. Disclosure expectations are based on SEC Release 33-10751 and SEC Regulation G (US public-domain works) and the ESMA Guidelines on Alternative Performance Measures (ESMA/2015/1415, reused with acknowledgement; this template is not endorsed by ESMA), paraphrased in original words. Formulas are standard financial mathematics. Corvid Commerce Group and every figure are fictional. This template is original text written for this collection. Check the current official versions of the cited rules before use. Template licence: MIT.