The Definitive SaaS Unit Economics & Venture Capital Health Manual
SaaS Financial Modeling • Rule of 40 & Payback Theorems
1. Core Mathematical Formulations
The Customer Lifetime Value (LTV) is computed as: \[ LTV = \frac{ARPU \cdot \text{Gross Margin}}{\text{Churn Rate}} \] The CAC Payback Period is defined as: \[ \text{Payback (months)} = \frac{CAC}{ARPU \cdot \text{Gross Margin}} \]
2. Industry Benchmarks
Venture capital standards consider an LTV:CAC ratio \(\ge 3.0\times\) and a CAC payback period \(\le 12\) months as the baseline for efficient, scalable growth. Ratios above \(5.0\times\) signal underinvestment in marketing.