CAC, LTV, ratio, payback, gross margin, contribution. Stated formulas and current values — the line that separates a business from a science project.
Layout
Unit Economics
6 blocks · 2-row grid
"UE level matters; UE direction matters more."
What it is
Six blocks, each a formula and a current value. CAC and LTV define the inputs. The Ratio compresses them. Payback states cash-cycle reality. Gross Margin grounds the math. Contribution Margin closes the loop on what reaches the bottom line per unit.
Origin
Unit-economics emerged as the standard analytical lens during the SaaS boom of the 2010s — the realisation that revenue could grow forever and still bankrupt a company if CAC was higher than LTV. CAC, LTV, payback, and gross-margin became the universal vocabulary because investors finally had a shared way to ask "does this work at scale?"
When to reach for it
Fundraising — every Series A+ deck has a unit-economics slide and a memo section.
Quarterly board updates — UE direction matters more than UE level early on.
Pricing or channel changes — you want a before/after on the same page.
The blocks
Worked example uses DoorDash (2018 disclosure-era unit economics).
What good looks like
Formula and value. Fully-loaded (S&M payroll + paid). Per-channel split if mixed.
Example — DoorDash (2018 disclosure-era unit economics)
CAC = (paid acquisition + S&M payroll + promo subsidies) / new active users. Blended $26 in 2018; ~$15 for organic-leaning urban markets, $42 for suburb expansion markets.
What good looks like
Formula and value. Retention horizon, gross margin used, expansion inclusion.
Example — DoorDash (2018 disclosure-era unit economics)
LTV = ARPU $90/yr × gross margin 11% × expected 2.4 yr retention = $24. Excludes expansion; with cross-sell to DashPass: ~$38.
What good looks like
Current ratio. Target ratio. The lever that closes the gap (CAC down or LTV up).
Example — DoorDash (2018 disclosure-era unit economics)
Blended 0.9 in 2018, target 1.5. Lever: gross-margin expansion (route optimisation + ad inserts) — CAC is structurally hard to reduce in a 3-sided marketplace.
What good looks like
Months to recover CAC on gross margin. Target. Cash implication.
Example — DoorDash (2018 disclosure-era unit economics)
Gross-margin payback 30 months in 2018. Target 18 months. Cash implication: every cohort burns ~$10/customer in first 12 months before breakeven.
What good looks like
Current %. What's in COGS. Trajectory at scale. Step-changes that improve it.
Example — DoorDash (2018 disclosure-era unit economics)
11% gross margin in 2018 — driver fees, payment processing, support, refunds. Targets: 18–22% at scale via route optimisation, batching, and platform ad revenue.
What good looks like
Per-unit contribution after all variable costs (incl. variable acquisition).
Example — DoorDash (2018 disclosure-era unit economics)
$1.30 per order in mature urban markets vs. -$0.90 in expansion markets. Mature markets fund expansion; the test is when expansion turns positive.
How to use it
Use fully-loaded CAC (sales + marketing salaries, not just paid ads).
Compute payback on gross margin, not revenue. Revenue payback hides bad COGS.
Show the formula and the value. "LTV = $1,148 = ARPU × GM × horizon" beats "LTV = $1,148."
Don't blend cohorts. Bad cohorts hide inside blended averages.
Common mistakes
Paid-CAC reported as CAC. Sales salaries are not negotiable.
LTV computed on retention horizons you haven't observed yet.
Blended numbers hiding catastrophic cohorts.
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