financial-modeling

name	financial-modeling
description	Unit economics, SaaS metrics, cohort analysis, scenario modeling, cash flow forecasting, and CC-specific financial calculations for OASIS AI
tags	["skill","finance","modeling","unit-economics","saas-metrics"]
triggers	["financial modeling","use financial modeling","run financial modeling","unit economics"]
tier	specialized

Financial Modeling

Note (2026-05-18): Worked examples below use pre-2026-05-18 numbers ($2,500 primary retainer, $2,982 MRR, 94% concentration). They remain as pedagogical references — the formulas + structure still apply. For current state see brain/STATE.md (~$371 confirmed MRR, no dominant client).

Overview

Every business decision is a financial decision with numbers attached. This skill gives CC the formulas, templates, and CLI tool to model revenue, measure unit economics, and make decisions from data rather than gut feel.

Trigger: python scripts/financial_model.py, "unit economics", "runway", "financial model", "what's our LTV"

CLI tool: python scripts/financial_model.py

Related: skills/strategic-planning/SKILL.md, skills/ceo-briefing/SKILL.md

---

Unit Economics

Core Formulas

Customer Acquisition Cost (CAC)

CAC = Total Sales & Marketing Spend (period) ÷ New Customers Acquired (period)

Example: CC spends $500 in ad spend + 10 hours × $50/hr opportunity cost = $1,000
Acquired 2 clients → CAC = $1,000 ÷ 2 = $500 per client

Note: For CC currently, CAC ≈ $0 cash (all organic/referral) but has real opportunity cost in time.

Lifetime Value (LTV)

LTV = ARPU × Gross Margin % × Average Customer Lifespan (months)

Where average customer lifespan = 1 ÷ Monthly Churn Rate

Example: ARPU = $1,000/mo, Gross Margin = 94%, Churn = 5%/mo
LTV = $1,000 × 0.94 × (1 ÷ 0.05) = $1,000 × 0.94 × 20 = $18,800

LTV:CAC Ratio

LTV:CAC = LTV ÷ CAC

Target: ≥ 3:1 (good), ≥ 5:1 (great), ≥ 10:1 (exceptional for early stage)
Below 1:1 → you're losing money on every customer

Example: LTV $18,800, CAC $500 → LTV:CAC = 37.6:1 (exceptional)

Payback Period

Payback Period (months) = CAC ÷ (ARPU × Gross Margin %)

Example: CAC $500, ARPU $1,000, Gross Margin 94%
Payback = $500 ÷ ($1,000 × 0.94) = $500 ÷ $940 = 0.5 months

Monthly Burn Rate

Burn Rate = Total Monthly Expenses - Total Monthly Revenue

Positive burn = profitable (revenue > expenses)
Negative burn = losing money each month

Runway

Runway (months) = Cash On Hand ÷ Monthly Net Burn

If profitable: runway is theoretically infinite — shift focus to growth metrics

---

SaaS Metrics Dashboard

Monthly Recurring Revenue (MRR) Components

Net MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR

New MRR:        Revenue from brand new customers this month
Expansion MRR:  Revenue increase from existing customers (upsells, add-ons)
Contraction MRR: Revenue decrease from existing customers (downgrades)
Churned MRR:    Revenue lost from customers who cancelled

Example (CC, March 2026):

• New MRR: $0 (no new clients)
• Expansion MRR: +$291 (primary retainer rev share grew)
• Contraction MRR: $0
• Churned MRR: $0
• Net MRR: +$291 → $2,982

ARR (Annual Recurring Revenue)

ARR = MRR × 12
Current ARR = $2,982 × 12 = $35,784

Margin Metrics

Gross Margin % = (Revenue - Direct Costs) ÷ Revenue × 100

CC's direct costs (per client):
  - Supabase hosting: ~$8/client/mo
  - AI API costs (Claude/GPT): ~$10-30/client/mo
  - Time cost: variable

Current gross margin: ~94% (services business, near-zero COGS)

Churn Metrics

Logo Churn Rate = Customers Lost ÷ Customers at Start of Period
Revenue Churn Rate = MRR Lost ÷ MRR at Start of Period

Net Revenue Retention (NRR) = (MRR Start + Expansion - Contraction - Churn) ÷ MRR Start × 100

NRR > 100% → existing customers are growing faster than they're churning (expansion revenue)
NRR = 100% → flat from existing base
NRR < 100% → churning out faster than expanding

CC's NRR (March 2026): ~110% (primary retainer rev share growing)

SaaS Quick Ratio

Quick Ratio = (New MRR + Expansion MRR) ÷ (Contraction MRR + Churned MRR)

> 4: Healthy, efficient growth
2-4: Growing with acceptable efficiency
< 2: Growing but inefficiently (churn is eating gains)
< 1: Net negative growth

CC's current Quick Ratio: Undefined (no churn denominator = perfect retention)

---

Cohort Analysis Framework

Monthly Cohort Retention Table

Track each cohort of clients (grouped by the month they started) and see how their revenue evolves.

## Cohort Retention — Revenue ($)

| Cohort | Month 1 | Month 2 | Month 3 | Month 6 | Month 12 |
|--------|---------|---------|---------|---------|----------|
| Jan 2026 | $X | $X (X%) | $X (X%) | $X (X%) | $X (X%) |
| Feb 2026 | $X | $X (X%) | $X (X%) | — | — |
| Mar 2026 | $X | — | — | — | — |

Percentages are vs Month 1 revenue for that cohort.
100%+ in later months = expansion. <100% = contraction or churn.

Building the Table

1. Pull client start dates and monthly revenue from Supabase
2. Group by month started (= cohort)
3. For each cohort × time offset, sum total revenue
4. Divide by Month 1 revenue to get retention %

Interpreting Cohorts

• Cohorts retaining >90% at Month 6 = sticky product
• Cohorts that grow to 110%+ = expansion revenue engine (good)
• Cohorts that drop below 60% at Month 3 = onboarding problem
• Compare cohort curves over time: is retention improving?

---

Scenario Modeling Templates

Revenue Projection

## Revenue Projection — [Date to Date]

### Assumptions
| Variable | Conservative | Moderate | Aggressive |
|----------|-------------|---------|-----------|
| New clients/mo | 0 | 1 | 2 |
| Avg deal size | $500 | $1,000 | $1,500 |
| Monthly churn rate | 5% | 2% | 0.5% |
| Expansion MRR/mo | 0% | 2% | 5% |

### Projected MRR

| Month | Conservative | Moderate | Aggressive |
|-------|-------------|---------|-----------|
| Mar 2026 (actual) | $2,982 | $2,982 | $2,982 |
| Apr 2026 | $X | $X | $X |
| May 2026 | $X | $X | $X |
| Jun 2026 | $X | $X | $X |

North star: $10,000 USD Net MRR by September 30, 2026 ($5K achieved 2026-06-20)
Gap: $4,000 (from $6,000 contracted) ÷ $1,000 avg deal = ~4 new clients needed

Price Change Model

Price Elasticity ≈ % Change in Demand ÷ % Change in Price

Typical SMB SaaS elasticity: -0.3 to -1.0
(10% price increase → 3-10% customer loss)

Revenue impact = New Price × (1 - Elasticity × Price Change %) × Current Customers

Example: Raise price 20% with -0.5 elasticity
  Expected customer loss: 0.5 × 20% = 10%
  Net revenue change: 1.20 × 0.90 = 1.08 → +8% revenue
  Decision: Take it (revenue positive, better client quality)

Hiring Impact Model

Monthly Revenue Per Employee = MRR ÷ Headcount (equivalent)
Current: $2,982 ÷ 1 (CC) = $2,982/person (excellent)

Hire break-even month = (Annual salary ÷ 12) ÷ Expected Monthly Revenue Generated

For a $2,000/mo VA:
  If VA handles 10 hrs/week × $50/hr CC opportunity cost = $2,000/mo recovered
  Break-even: $2,000 ÷ $2,000 = Month 1
  Decision: Take it. Any recovered CC time that generates $1 in sales pays for itself.

Client Concentration Risk — Herfindahl Index

Herfindahl-Hirschman Index (HHI) = Sum of (each client's revenue share)²

HHI = 1.0    → 100% concentrated (one client = all revenue) — CRITICAL
HHI 0.5-1.0  → Highly concentrated — dangerous
HHI 0.2-0.5  → Moderately concentrated — manageable
HHI < 0.2    → Diversified — healthy

CC current (March 2026):
  Primary retainer: $2,791 / $2,982 = 93.6%
  Base (other): $191 / $2,982 = 6.4%
  HHI = (0.936)² + (0.064)² = 0.876 + 0.004 = 0.880

Interpretation: CRITICAL concentration risk.
One bad call with the primary retainer = 94% revenue collapse.
Target by Q3 2026: HHI < 0.5 (add 3+ clients with no single client >40%)

---

Cash Flow Forecasting

90-Day Rolling Cash Flow Projection

## Cash Flow Forecast — [Start Date] to [End Date]

### Revenue (Inflows)
| Source | Monthly | Notes |
|--------|---------|-------|
| Primary retainer | $2,500 | Flat, invoiced 1st of month |
| Primary retainer rev share | ~$291 | 15% × ~$1,940 community MRR |
| Base retainers | $191 | Other clients |
| One-time projects | $0 | Add when confirmed |
| **Total Inflows** | **~$2,982** | |

### Expenses (Outflows)
| Item | Monthly | Notes |
|------|---------|-------|
| Claude Pro | $140 | Critical infrastructure |
| Supabase | $25 | Database |
| Hostinger VPS | $14 | n8n automation server |
| Domain/misc | $5 | Estimated |
| **Total Outflows** | **~$184** | |

### Net Cash Position
| Month | Net Monthly | Running Cash |
|-------|------------|-------------|
| Month 1 | $2,798 | [Balance + $2,798] |
| Month 2 | $2,798 | [+ $2,798] |
| Month 3 | $2,798 | [+ $2,798] |

Revenue Recognition Rules

Retainers: Recognized monthly when work is delivered (accrual). Do not count as revenue until the month it covers.

Project work: Recognized on completion of agreed milestones. If multi-month, recognize proportionally.

RevShare (primary retainer): Recognized monthly based on actual community MRR reported. Volatile — model conservatively.

Emergency Fund Sizing

3-month emergency fund = 3 × Monthly Expenses = 3 × $184 = $552 (trivial for CC)

Better emergency metric: primary-retainer churn buffer
If primary-retainer churns tomorrow, how many months until we need to cut costs?
Cash reserve ÷ Monthly expenses after primary-retainer churn = $X ÷ $184 = X months

Build pipeline NOW such that HHI < 0.5 before needing the emergency fund.

---

CC-Specific Financial Snapshot

Current state as of Q1 2026. Update after each /briefing run.

## CC Financial Snapshot — March 2026

| Metric | Value | Target | Status |
|--------|-------|--------|--------|
| MRR | $2,982 | $5,000 | 59.6% |
| ARR | $35,784 | $60,000 | 59.6% |
| Gross Margin | ~94% | >85% | OK |
| Monthly Overhead | $184 | <$500 | OK |
| Net Profit/mo | ~$2,798 | >$4,500 | Tracking |
| CAC (cash) | ~$0 | <$300 | Exceptional |
| LTV (est.) | $18,000+ | >$10,000 | OK |
| LTV:CAC | 36:1+ | >3:1 | Exceptional |
| HHI (concentration) | 0.88 | <0.5 | CRITICAL |
| Runway | Indefinite | >12 mo | OK |
| MRR gap to target | $2,018 | $0 | 48 days |
| Clients needed | ~2 × $1,000 | 0 | In pipeline |

Key Financial Risks

1. Client concentration (HHI 0.88): the primary retainer is 94% of revenue. No contract. Mitigate by closing 2-3 new clients this quarter.
2. No diversification: All OASIS, no PropFlow or Nostalgic revenue yet. Mitigate with PropFlow MVP launch.
3. RevShare volatility: the primary retainer's 15% rev share fluctuates with community size. Don't plan expansion from this source.

Financial Priorities (Q2 2026)

1. Reduce HHI to <0.6 by adding 2 new clients at $500+ MRR
2. Hit $5,000 MRR by May 15 (48 days from March 28)
3. Begin PropFlow revenue modeling once MVP ships
4. Re-evaluate pricing quarterly (current floor: $500/mo, ceiling: $1,500/mo)

---

CLI Reference

# Calculate all unit economics from current data
python scripts/financial_model.py unit-economics

# 12-month revenue forecast
python scripts/financial_model.py forecast --months 12

# Bull/base/bear scenario model
python scripts/financial_model.py scenario --type base

# Client concentration risk (HHI)
python scripts/financial_model.py concentration

# Cash runway calculation
python scripts/financial_model.py runway

# JSON output for agent consumption
python scripts/financial_model.py unit-economics --json

---

---

Unit Economics Calculator — Step-by-Step

Use this when evaluating a pricing change, new client acquisition strategy, or hiring decision. Run with actual numbers, not estimates.

Step 1 — Calculate CAC

CAC = (Monthly cash spend on sales/marketing) + (CC hours on sales × $50/hr opportunity cost)
      ÷ New clients acquired that month

Example (April 2026):
  Cash spend: $0 (organic only)
  CC hours on sales: 8 hrs × $50 = $400
  New clients: 1
  CAC = $400 ÷ 1 = $400

If CAC is $0 cash (referral/organic), still track opportunity cost. Invisible costs are real costs.

Step 2 — Calculate LTV

LTV = Monthly MRR per client × Gross Margin % × Avg Lifespan (months)

Avg Lifespan = 1 ÷ Monthly Churn Rate

Example:
  ARPU: $1,000/mo
  Gross Margin: 94%
  Churn rate: 4%/mo → Avg lifespan: 25 months
  LTV = $1,000 × 0.94 × 25 = $23,500

Step 3 — Calculate LTV:CAC Ratio

LTV:CAC = LTV ÷ CAC

Benchmarks:
  < 1:1  → You lose money on every client. Stop and fix.
  1–3:1  → Barely viable. Improve margin or reduce CAC.
  3–5:1  → Healthy. Standard for services.
  5–10:1 → Great. Keep scaling.
  > 10:1 → Exceptional. Increase sales spend aggressively.

Example: $23,500 ÷ $400 = 58.75:1 (exceptional — organic acquisition + high margin)

Step 4 — Calculate Payback Period

Payback Period (months) = CAC ÷ (Monthly ARPU × Gross Margin %)

Example: $400 ÷ ($1,000 × 0.94) = $400 ÷ $940 = 0.4 months (~12 days)

Target: < 6 months for services. < 12 months for SaaS with high churn risk.

Step 5 — Break-Even Analysis Per Client

At what point does a client become profitable, net of all costs?

Monthly net from client = ARPU - Direct costs (hosting + API + time)
Cumulative net = Monthly net × Months active

Break-even month = CAC ÷ Monthly net

Example:
  ARPU: $1,000
  Direct costs: $60 (Supabase $8 + API $30 + 1hr CC time $22)
  Monthly net: $940
  CAC: $400
  Break-even: $400 ÷ $940 = 0.4 months → profitable by end of month 1

Add this to every new client onboarding record in Supabase.

---

Scenario Modeling — Bull / Base / Bear

Use for any significant decision: pricing change, new hire, product launch, marketing spend.

Input Assumptions Matrix

## Scenario: [Decision Name] — [Date]

| Variable | Bear | Base | Bull |
|---------|------|------|------|
| New clients/month | 0 | 1 | 2–3 |
| Avg deal size | $500 | $1,000 | $1,500 |
| Monthly churn rate | 5% | 2% | 0.5% |
| Expansion MRR/month | 0% | 2% | 5% |
| CAC (time cost) | $600 | $400 | $200 |

Assign probabilities (must sum to 100%):
  Bear: X% | Base: X% | Bull: X%

Output: Expected MRR Trajectory

Month 1: Bear $X | Base $X | Bull $X
Month 3: Bear $X | Base $X | Bull $X  
Month 6: Bear $X | Base $X | Bull $X

Expected Value (weighted avg) = (Bear × P) + (Base × P) + (Bull × P)

Trigger to shift scenarios:
  → Bear: [specific event, e.g., "primary-retainer churns or 0 new clients in April"]
  → Bull: [specific event, e.g., "2 new clients close in April"]

Decision Rule

• If Bear EV still covers fixed costs → proceed with the decision
• If Bear EV creates cash flow risk → add a risk mitigation step first
• If Base EV hits north star within target timeline → this is the right bet

---

Cash Flow Runway Projection

90-Day Forward Projection Template

Update this monthly. It is the single most important number for a solo operator.

## Cash Flow Projection — [Start Date]

### Revenue Inflows (Conservative)

| Source | Month 1 | Month 2 | Month 3 | Notes |
|--------|---------|---------|---------|-------|
| Primary retainer | $2,500 | $2,500 | $2,500 | Flat |
| Primary retainer rev share | $451 | $480 | $510 | Growing 6.5%/mo |
| Other retainers | $191 | $191 | $191 | Stable |
| New clients | $0 | $500 | $1,000 | 1 new/mo Base |
| **Total inflows** | **$3,142** | **$3,671** | **$4,201** | |

### Expenses (Outflows)

| Item | Monthly | Quarter Total |
|------|---------|--------------|
| Claude Pro | $140 | $420 |
| Supabase | $25 | $75 |
| Hostinger VPS | $14 | $42 |
| Misc domains/tools | $5 | $15 |
| **Total outflows** | **$184** | **$552** |

### Net Position

| Month | Net | Running Total |
|-------|-----|--------------|
| Month 1 | $2,958 | $X (starting balance + $2,958) |
| Month 2 | $3,487 | $X + $3,487 |
| Month 3 | $4,017 | $X + $4,017 |

### Runway if primary-retainer churns tomorrow
  Monthly expenses without primary retainer: $184
  Monthly revenue without primary retainer: ~$191 (other retainers)
  Net monthly: +$7 (barely cash-flow positive — no buffer)
  Runway: Indefinite on expenses, but zero growth buffer
  → This is why HHI reduction is the #1 financial priority

Runway Calculation

Standard runway: Cash on hand ÷ Monthly burn rate
Survival runway (if major client churns): Cash on hand ÷ (Monthly expenses - retained revenue)

Target: Survival runway ≥ 6 months at all times

---

Revenue Diversification Metrics

Herfindahl-Hirschman Index (HHI) — Client Concentration Risk

Already in this skill above. Target thresholds for action:

HHI	Status	Action
> 0.7	Critical	Close 2+ new clients before any other priority
0.5–0.7	High risk	Add 1 new client per month until below 0.5
0.25–0.5	Moderate	Monitor. Keep pipeline active.
< 0.25	Healthy	Shift focus from diversification to expansion

Revenue Stream Diversification Score

Track percentage of MRR from each category:

| Stream | MRR | % of Total | Target % |
|--------|-----|-----------|----------|
| OASIS retainers | $X | X% | <60% |
| OASIS rev share | $X | X% | <15% |
| PropFlow SaaS | $X | X% | >20% by Q3 |
| Nostalgic Requests | $X | X% | >10% by Q4 |
| One-time projects | $X | X% | <10% (not recurring) |

Alert rule: If any single stream exceeds 70% of total MRR, HHI is critical regardless of client count.

MRR Quality Score

Not all MRR is equal. Score the MRR portfolio:

Quality Score = (Contracted MRR × 1.0) + (Handshake MRR × 0.7) + (Rev Share MRR × 0.5)
                ÷ Total MRR

> 0.85 → High quality (mostly contracted)
0.65–0.85 → Medium quality (mix of contracted and informal)
< 0.65 → Low quality (mostly informal — high churn risk)

CC current: ~0.64 (primary-retainer informal + rev share dominant)
Target: 0.75+ by adding formal contracts to existing clients

---

Obsidian Links

• [[brain/STATE]] | [[brain/USER]] | [[skills/strategic-planning/SKILL.md]]
• [[skills/ceo-briefing/SKILL.md]] | [[../../CMO-Agent/skills/competitive-intelligence/SKILL]]
• [[skills/client-success/SKILL.md]] | [[memory/ACTIVE_TASKS]] | [[brain/CAPABILITIES]]