saas-unit-economics-and-cohort-model

name	saas-unit-economics-and-cohort-model
description	Use when section 10 of a SaaS / ICT plan is being built or reviewed. Use the corresponding meta skill for a non-SaaS case.
metadata	{"portable":true,"compatible_with":["claude-code","codex"]}

SaaS Unit Economics & Cohort Model Skill

Overview

Produce the SaaS-specific unit economics and cohort exhibits that turn a generic financial model into a bankable, investor-grade SaaS plan. This skill is the operating discipline behind Section 10 for any SaaS plan; it should always be run together with 10-financial-projections and the SaaS financial-projection template.

Use When

• Section 10 of a SaaS / ICT plan is being built or reviewed
• An investor or DFI has asked for the unit economics, LTV:CAC, NRR, Rule of 40, or burn multiple
• A plan claims SaaS but does not yet have the canonical SaaS metrics
• A founder is making a pricing / packaging / growth decision and needs the unit-economic impact
• The plan needs to pass meta-bankability-scoring for SaaS investors

Do Not Use When

• The business is not SaaS / subscription / recurring revenue (use 10-financial-projections generic flow)
• The plan is pre-PMF and there's no meaningful customer data to model (run saas-mvp-and-product-market-fit-strategy first; this skill needs at least directional inputs)
• The plan is for a one-off services or grant deliverable (use proposal-architect)

Required Inputs

Input	Source / provider	Required?	If absent
Unit Economics And Cohort Model brief and decision audience	Client, plan owner, or approved project files	Yes	Stop before making a recommendation; state the missing decision context.
Claims, assumptions, and supporting evidence	Source register, model, research notes, interviews, or operating records	Yes	Separate known facts from assumptions and return a qualified gap list.
Authority and delivery constraints	Requesting owner and repository instructions	Yes	Remain read-only and produce a draft or review only.
Current accounting, tax, valuation, or pricing basis	Finance owner, accounting records, signed contracts, and current authoritative sources	Conditional	Mark the treatment unresolved and require qualified professional review.

• ARR / MRR (current or projected)
• ARPU by tier / segment
• New customer acquisition rate
• Monthly logo churn (gross)
• Monthly expansion rate
• S&M cost (fully loaded, including sales team + marketing + tools + allocated overhead)
• Hosting / infrastructure / customer-support / third-party-fee cost per customer
• Country context (FX, payment-rail fees, AI cost in USD)

Workflow

1. Compute the twelve core metrics per references/saas-unit-economics-model-template.md: MRR, ARR, Net New ARR, Gross Margin (recurring), CAC, CAC Payback, LTV (three formulations), LTV:CAC, GRR, NRR, Magic Number, Rule of 40, Burn Multiple, Quick Ratio.
2. Build the ARR waterfall monthly for Year 1, quarterly for Years 2–5.
3. Build the cohort retention matrix — both logo cohort and revenue cohort. Compute the smile curve where data permits.
4. Separate the involuntary-churn cohort (Africa-specific discipline) so payment-rail issues are not conflated with product-fit issues.
5. Compute cohort-driven LTV per references/saas-cohort-and-retention-model-template.md.
6. Benchmark against published SaaS benchmarks (OpenView, KeyBanc, ChartMogul, ProfitWell). Adjust African benchmarks per the template's notes.
7. Sensitivity-test the unit economics: ±20% on churn, ±20% on ARPU, ±20% on CAC, ±20% on win-rate, +20% FX depreciation.
8. Scenario-test Base / Bear / Bull / Stress.
9. Diagnose the binding constraint — which lever (acquisition, retention, expansion, pricing) most improves the plan? This is the most useful output.
10. Wire into living-plan governance — assign cadence, owner, variance threshold, decision-log expectations per meta-living-plan-governance.

Decision, stop, and recovery controls

• Decision point: confirm that the requested output is the SaaS unit-economics model and that the decision concerns whether LTV, payback, NRR, and burn support the growth plan.
• Stop condition: halt the affected conclusion if required evidence is missing (cohort revenue, churn, CAC, gross margin, and cash records) or if the work could lead to this identified risk: using blended averages to hide deteriorating cohorts.
• Recovery: obtain the missing record or reviewer, repeat the affected check, and update the exception record before release.

Quality Bar

• All twelve metrics computed with explicit formulas and assumptions
• ARR waterfall mandatory and arithmetically consistent with customer-build tab
• Cohort retention matrix produced (or projected if pre-revenue)
• Smile curve test applied; if curve never turns upward, expansion strategy or LTV cap is disclosed
• Involuntary churn separated from voluntary churn
• Benchmarks cited; deviations explained
• Sensitivity and scenario analyses cover the binding constraints
• Plan-vs-actual variance protocol installed
• The CFO of a sceptical Series A investor would not laugh

Anti-Patterns

• Aggregate churn rate without cohort breakdown

• LTV computed without gross-margin adjustment

• CAC computed from marketing spend only (no sales-team comp)

• Using US benchmarks without African adjustment

• Conflating voluntary and involuntary churn

• "We'll achieve 120% NRR by year 3" without expansion mechanic specified

• Magic Number > 2 in a market with no proven channel — fantasy

• Applying the wrong neighbouring route to saas unit economics and cohort model. Correction: confirm the decision and route to the named neighbour before analysis.

• Treating an assumption as verified evidence. Correction: label it, cite its source or owner, and assign a verification action.

• Recommending action without a decision threshold. Correction: state the measurable acceptance condition and review trigger.

• Recording an unavailable check as passed. Correction: mark it not assessed and state the consequence for the decision.

• Mutating or publishing during an analysis-only task. Correction: remain read-only until the owner gives explicit authority.

Outputs

Artefact	Consumer	Observable acceptance condition
Unit Economics And Cohort Model deliverable	Named decision-maker or plan author	The recommended choice, assumptions, countercase, and next action are explicit.
Evidence and exception register	Reviewer, funder, board, or implementation owner	Every load-bearing claim is sourced or labelled as an assumption; missing checks are not shown as passes.

• Unit economics dashboard (Mersch format)
• ARR waterfall (monthly Y1, quarterly Y2–5)
• Cohort retention matrix (logo + revenue)
• Involuntary-churn cohort (Africa contexts)
• Sensitivity + scenario analyses
• Diagnosis of binding constraint
• Living-plan cadence assignment

References

• references/saas-unit-economics-model-template.md — formulas, benchmarks, worked example (lives in 10-financial-projections/references/)
• references/saas-cohort-and-retention-model-template.md — cohort matrix discipline
• book-extractions/mersch-hacking-saas-extraction.md — CFO-grade discipline
• book-extractions/cotton-run-a-saas-business-extraction.md — Rule of 40, churn, LTV:CAC rules
• book-extractions/walling-saas-playbook-extraction.md — 80/20 metrics chapter

Living-Plan Cadence Defaults

Metric	Cadence	Owner	Variance threshold
ARR / MRR	weekly	CFO / Founder	±15% triggers replan
Net New ARR	weekly	CFO	±20%
Gross Margin	monthly	CFO	±5pp
CAC	monthly	CFO + Head of GTM	±20%
CAC Payback	monthly	CFO	>18 months alarm
LTV	quarterly	CFO	±15%
Churn (gross)	weekly	Head of CS	±0.5pp
NRR / GRR	monthly	Head of CS + CFO	±10pp NRR
Magic Number	quarterly	CFO + Head of GTM	<0.75 alarm
Rule of 40	quarterly	CFO	<30 alarm
Burn Multiple	monthly	CFO	>2.5 alarm
Cohort retention	monthly	CFO + Head of CS	new cohort >5pp worse

Africa / Uganda Application Notes

• Adjust African benchmarks: gross margin -5 to -10pp, CAC payback +50–100%, Rule of 40 target 30 in years 1–3 acceptable.
• Always separate involuntary churn; African payment rails fail 3–6% annually.
• Track all metrics in local currency for DFI/bank presentations and USD for international investors.
• AI cost per tenant is a real cost line and is FX-exposed; model explicitly.

Evidence Produced

Evidence	Format	Acceptance condition
SaaS unit-economics model decision trace	Sources, calculations, assumptions, countercase, and selected action	A reviewer can trace the selected action and rejected alternatives to the cited inputs.
Exception record	Failed and not-assessed checks with owner and due action	The register exposes every unresolved exception that could lead to using blended averages to hide deteriorating cohorts.

Capability and Permission Boundaries

Read supplied records and use non-mutating checks to produce the SaaS unit-economics model; calculating in a controlled copy of the workbook is permitted when requested. Do not publish, contact third parties, alter live systems, commit funds, or claim legal, tax, audit, valuation, ESG, or investment assurance without the owner's explicit authorisation and the appropriate reviewer.

Degraded Mode

If cohort revenue, churn, CAC, gross margin, and cash records cannot be obtained, return a qualified SaaS unit-economics model covering only the checks that remain supportable. Leave this decision unresolved: whether LTV, payback, NRR, and burn support the growth plan. Record the evidence owner and next check; an inaccessible source, tool, or reviewer is never a pass.

Decision Rules

Decision condition	Action	Failure or risk avoided
Evidence is sufficient to decide: whether LTV, payback, NRR, and burn support the growth plan	Record the conclusion, source trail, owner, and review trigger in the SaaS unit-economics model.	Risk of using blended averages to hide deteriorating cohorts
Material evidence conflicts or remains uncertain	Calculate the metric by acquisition cohort and segment, then compare it with the blended result before accepting the growth case.	Selecting an option without resolving the decision-relevant uncertainty
Required evidence is missing: cohort revenue, churn, CAC, gross margin, and cash records	Mark the decision on whether LTV, payback, NRR, and burn support the growth plan not assessed in the SaaS unit-economics model, and send it to the finance owner and investor-readiness reviewer.	Otherwise, the work risks using blended averages to hide deteriorating cohorts

Quality Standards

Accept the SaaS unit-economics model only when evidence is sufficient for this decision: whether LTV, payback, NRR, and burn support the growth plan. Assumptions and countercases remain visible, calculations and cross-references reconcile, and the reviewer can see how the recommendation addresses the risk of using blended averages to hide deteriorating cohorts.

Worked Example

Blended LTV:CAC passes while recent cohorts churn faster. Recalculate retention, payback, and contribution by cohort and use the deteriorating cohort in the downside plan.

Finance Doctrine Gate

Apply the Chwezi doctrine to the SaaS unit-economics model, using the reporting basis and effective date supported by cohort revenue, churn, CAC, gross margin, and cash records. Reconcile the treatment to the model and narrative, and have the controller or external accountant review the treatment, reconciliation, and exposure to this risk: using blended averages to hide deteriorating cohorts.