saas-economics-efficiency-metrics

## Purpose Determine whether your SaaS business model is fundamentally viable and capital-efficient. Use this to calculate unit economics, assess profitability, manage cash runway, and decide when to scale vs. optimize. Essential for fundraising, board reporting, and making smart investment trade-offs. This is not a finance reporting tool—it's a framework for PMs to understand whether the business can sustain growth, when to prioritize efficiency over growth, and which investments have positive returns. ## Key Concepts ### Unit Economics Family Metrics that measure profitability at the customer level—the foundation of sustainable SaaS. **Gross Margin** — Percentage of revenue remaining after direct costs (COGS). - **Why PMs care:** A feature that generates $1M revenue at 80% margin is worth far more than $1M at 30% margin. Margin determines which features to prioritize. - **Formula:** `(Revenue - COGS) / Revenue × 100` - **COGS includes:** Hosting, infrastructure, payment processing, customer onboarding costs - **Benchmark:** SaaS 70-85% good; <60% concerning **CAC (Customer Acquisition Cost)** — Total cost to acquire one customer. - **Why PMs care:** Shapes entire go-to-market strategy. Determines which channels are viable and how much you can invest in product-led growth. - **Formula:** `Total Sales & Marketing Spend / New Customers Acquired` - **Benchmark:** Varies by model—Enterprise $10K+ ok; SMB <$500 target - **Include:** Marketing spend, sales salaries, tools, ...