Unit economics
CAC, payback, LTV, retention, magic number, burn multiple.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: unit economics.Updated 30 September 2026
What it does
The numbers an investor asks for, read from the model rather than typed in beside it. Customer acquisition cost is sales and marketing over new customers; payback is that cost in months of gross margin; lifetime value is gross margin per customer over the shorter of a horizon and the life churn implies; net and gross revenue retention are trailing four-quarter identities on the ARR roll; the magic number is net new ARR over the prior quarter’s sales and marketing; the burn multiple is cash burned per dollar of net new ARR.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Unit Economics, rows 6–12: Sales and marketing, New customers, Customer acquisition cost ($m per new customer), Gross margin per customer per quarter ($m)…
- Unit Economics, rows 15–19: Net revenue retention, trailing four quarters, Gross revenue retention, trailing four quarters, Magic number: net new ARR over prior-quarter sales and marketing, Burn multiple: operating cash burned per dollar of net new ARR (0 when generating cash)…
What a reviewer looks for
- LTV as margin over churn with a tiny churn rate.
- Net retention quoted without gross retention beside it.
- CAC on marketing alone, without the sales team.
Learn it, then build it
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