Unit Economics Playbook, Make Growth Cheaper as You Scale

If every new customer takes too long to pay back, growth is just a slow leak. The goal is simple: grow in a way that makes each unit healthier as you scale.

The Day Growth Made Us Poorer

A few years ago, we ran a promo that spiked signups. The dashboard looked great, but the bank account did not. Support tickets tripled, hosting costs climbed, and discounts crept in. When we built a seven-line P&L for a single customer, the truth was blunt: we were buying vanity.

We changed the pricing metric, tightened onboarding, and moved new deals to annual prepaid in Pula. Payback time fell from 14 months to 7. Lesson, unit economics are the engine, not a postscript.

Principle: Scale only counts if the unit gets better

Healthy growth shows up in three places,

1. Contribution margin rises, revenue per customer grows faster than variable costs.
2. Payback shortens, CAC is earned back in fewer months.
3. Retention strengthens, customers stay longer and expand.

The 7-Line Unit P&L (per customer, per month)

Use this as your single source of truth.

1. ARPU, average revenue per user.
2. COGS, hosting, data, payments, third party APIs.
3. Gross margin, (ARPU − COGS) ÷ ARPU.
4. Variable success and support, onboarding, CSM time, tickets.
5. Contribution margin, Gross profit − variable success and support.
6. CAC, sales and marketing cost to win one customer.
7. Payback months, CAC ÷ Contribution margin.

Add two health checks,

• Lifetime value, LTV, Contribution margin × expected lifetime in months.
• LTV to CAC, target 3 to 1 or better.

Benchmarks to aim for, B2B with sales assist
Payback under 12 months is good, under 6 is excellent.
Gross margin above 70 percent, contribution margin trending up each quarter.

Worked example (sample SaaS segment)

• ARPU: P1,000
• COGS: P250 → Gross margin: 75%
• Variable success/support: P150 → Contribution margin: P600
• CAC: P3,000 → Payback: 5.0 months
• Expected lifetime: 24 months → LTV: P14,400 → LTV/CAC: 4.8×
• Quarterly new recurring revenue: P40,000; prior quarter S&M expense: P60,000 → Sales efficiency: 2.67

Build the same seven lines for each segment (SMB, mid‑market, enterprise) and compare.

Retention and Expansion: the compounding effect

• Gross retention, revenue that remains before expansion, aim above 90 percent.
• Net revenue retention, NRR, (start revenue + expansion − contraction − churn) ÷ start revenue, aim above 100 percent, elite above 120 percent.
• Time to value, how fast the first win arrives, weeks not months. Faster time to value lifts retention and lowers support cost per user.

Sales efficiency (without the buzzwords)

Skip the nicknames, track the ratio that matters,

• Sales efficiency ratio, quarterly new recurring revenue × 4 ÷ prior quarter Sales and Marketing (S&M) expense.
  Healthy is 0.5 to 1.0, world class is above 1.0 for sustained periods. Falling efficiency means channel mix or qualification needs work.

Five levers that move unit economics in 60 days

1. Pricing metric fit Tie price to the value driver customers feel monthly, for example records processed, locations, outcomes. Add a platform fee plus usage to protect margin.
2. Packaging discipline Three tiers, clear fences, the middle tier is the obvious choice. Kill grandfathered discounts. Add an annual prepaid option in Pula, for example 10 percent off, to improve cash conversion and shorten payback.
3. Onboarding to first value Publish a 14‑day go‑live plan. Automate data import, templates, and checklists. Reward CSMs for time to value, not hours spent.
4. Support and success costs Instrument tickets per 100 accounts, deflect the top 3 issues in product, and add in‑app help. Aim to lower variable success cost per customer by 20 percent.
5. Acquisition quality Tighter ICP, stricter qualification, stop discounting that drags payback out. Shift budget to channels with stronger intent, for example partner co‑sell and customer referrals.

Common failure modes (avoid these)

• Discount creep: floor price erodes, payback drifts out.
• Metric mismatch: pricing ties to a metric customers do not feel monthly.
• Free trials without conversion design: lots of usage, little revenue.
• Onboarding inertia: first value takes months, churn rises in month 1–3.
• Support debt: tickets repeat because product fixes lag.
• Cohort blindness: you average away segment truths.

The scoreboard (one page for the board)

Track these six, side by side, by cohort if you can,

• ARPU and Gross margin percent
• Contribution margin
• CAC and Payback months
• Gross retention and NRR
• Time to value
• Sales efficiency ratio

Add a small table of last quarter Pula cash effects, prepaid collected, deposits, milestones, refunds.

30, 60, 90-day plan

Days 1 to 30

• Build the 7 line unit P and L for three customer segments.
• Publish the time to value map and remove two onboarding steps.
• Set a prepaid annual in Pula with a simple price card.

Days 31 to 60

• Tighten ICP and discount rules, add a deal desk checklist.
• Ship one product change to remove the top support ticket theme.
• Launch a referral offer that pays from contribution margin, not revenue.

Days 61 to 90

• Repackage the middle tier to include the most requested value, raise the floor price slightly.
• Expand partner co sell with one joint offer tied to a measurable outcome.
• Review cohort results, keep what lifts contribution margin and payback, cut the rest.

Board questions that surface the truth

1. Where does contribution margin improve with scale, and where does it flatten?
2. Which change shortened payback last quarter, and what is next?
3. What percentage of new bookings are annual prepaid in Pula, and how much cash runway did that add?
4. What is the top reason for churn in the last three months, and what change addresses it this quarter?

Close: growth that gets cheaper as you go

Write the seven lines. Choose one lever per month. Report progress in plain numbers, not adjectives. When the unit gets healthier with each cohort, scale stops being a cliff and becomes a ramp.

This week’s challenge: Build the 7 line unit P and L for one customer segment, then pick a single lever to move in 30 days.