Skills › Financial Services › unit-economics
unit-economics
The facts
Its description
Analyze unit economics for PE targets — ARR cohorts, LTV/CAC, net retention, payback periods, revenue quality, and margin waterfall. Essential for software/SaaS, recurring revenue, and subscription businesses. Use when evaluating revenue quality, building a cohort analysis, or assessing customer economics. Triggers on "unit economics", "cohort analysis", "ARR analysis", "LTV CAC", "net retention", "revenue quality", or "customer economics".
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From its settingsline 3
When it starts
The agent would pick this skill when someone is evaluating the customer-level economics of a software, subscription, or recurring-revenue business — asking about ARR cohorts, LTV/CAC, net retention, payback, or overall revenue quality, typically in a PE diligence context. The description is explicit that it triggers on those terms and on "customer economics".
Things a person might say (the model's guesses)
- “Can you build a cohort analysis for this SaaS target we're looking at?”
- “What are the LTV/CAC and net retention numbers for this subscription business?”
- “Help me assess the revenue quality of this recurring revenue company before we bid.”
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A model's reading
Licence
Apache-2.0, from LICENSE
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From the repositorylicence text
The text
1---
2name: unit-economics
3description: Analyze unit economics for PE targets — ARR cohorts, LTV/CAC, net retention, payback periods, revenue quality, and margin waterfall. Essential for software/SaaS, recurring revenue, and subscription businesses. Use when evaluating revenue quality, building a cohort analysis, or assessing customer economics. Triggers on "unit economics", "cohort analysis", "ARR analysis", "LTV CAC", "net retention", "revenue quality", or "customer economics".
4---
6# Unit Economics Analysis
Unit Economics Analysis
Raw lines 1 to 7Workflow
Raw lines 8 to 910### Step 1: Identify Business Model
12Determine the revenue model to tailor the analysis:
13- **SaaS / Subscription**: ARR, net retention, cohorts
14- **Recurring services**: Contract value, renewal rates, upsell
15- **Transaction / usage-based**: Revenue per transaction, volume trends, take rate
16- **Hybrid**: Break down by revenue stream
Step 1: Identify Business Model
Determine the revenue model to tailor the analysis:
- SaaS / Subscription: ARR, net retention, cohorts
- Recurring services: Contract value, renewal rates, upsell
- Transaction / usage-based: Revenue per transaction, volume trends, take rate
- Hybrid: Break down by revenue stream
18### Step 2: Core Metrics
20#### ARR / Revenue Quality
21- **ARR bridge**: Beginning ARR → New → Expansion → Contraction → Churn → Ending ARR
22- **ARR by cohort**: Vintage analysis — how does each annual cohort retain and grow?
23- **Revenue concentration**: Top 10/20/50 customers as % of total
24- **Revenue by type**: Recurring vs. non-recurring vs. professional services
25- **Contract structure**: ACV distribution, multi-year %, auto-renewal %
27#### Customer Economics
28- **CAC (Customer Acquisition Cost)**: Total S&M spend / new customers acquired
29- **LTV (Lifetime Value)**: (ARPU × Gross Margin) / Churn Rate
30- **LTV:CAC ratio**: Target >3x for healthy businesses
31- **CAC payback period**: Months to recover acquisition cost
32- **Blended vs. segmented**: Break down by customer segment (enterprise vs. SMB vs. mid-market)
34#### Retention & Expansion
35- **Gross retention**: % of beginning ARR retained (excludes expansion)
36- **Net retention (NDR)**: % of beginning ARR retained including expansion
37- **Logo churn**: % of customers lost
38- **Dollar churn**: % of revenue lost (often different from logo churn)
39- **Expansion rate**: Upsell + cross-sell as % of beginning ARR
41#### Cohort Analysis
42Build a cohort matrix showing:
44| Cohort | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 |
45|--------|--------|--------|--------|--------|--------|
46| 2020 | $1.0M | $1.1M | $1.2M | $1.1M | |
47| 2021 | $1.5M | $1.7M | $1.8M | | |
48| 2022 | $2.0M | $2.3M | | | |
49| 2023 | $3.0M | | | | |
51Show both absolute $ and indexed (Year 0 = 100%) views.
53#### Margin Waterfall
54- Revenue → Gross Profit → Contribution Margin → EBITDA
55- Fully loaded unit economics: what does it cost to acquire, serve, and retain a customer?
56- Gross margin by revenue stream (subscription vs. services vs. other)
Step 2: Core Metrics
ARR / Revenue Quality
- ARR bridge: Beginning ARR → New → Expansion → Contraction → Churn → Ending ARR
- ARR by cohort: Vintage analysis — how does each annual cohort retain and grow?
- Revenue concentration: Top 10/20/50 customers as % of total
- Revenue by type: Recurring vs. non-recurring vs. professional services
- Contract structure: ACV distribution, multi-year %, auto-renewal %
Customer Economics
- CAC (Customer Acquisition Cost): Total S&M spend / new customers acquired
- LTV (Lifetime Value): (ARPU × Gross Margin) / Churn Rate
- LTV:CAC ratio: Target >3x for healthy businesses
- CAC payback period: Months to recover acquisition cost
- Blended vs. segmented: Break down by customer segment (enterprise vs. SMB vs. mid-market)
Retention & Expansion
- Gross retention: % of beginning ARR retained (excludes expansion)
- Net retention (NDR): % of beginning ARR retained including expansion
- Logo churn: % of customers lost
- Dollar churn: % of revenue lost (often different from logo churn)
- Expansion rate: Upsell + cross-sell as % of beginning ARR
Cohort Analysis
Build a cohort matrix showing:
| Cohort | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 |
|---|---|---|---|---|---|
| 2020 | $1.0M | $1.1M | $1.2M | $1.1M | |
| 2021 | $1.5M | $1.7M | $1.8M | ||
| 2022 | $2.0M | $2.3M | |||
| 2023 | $3.0M |
Show both absolute $ and indexed (Year 0 = 100%) views.
Margin Waterfall
- Revenue → Gross Profit → Contribution Margin → EBITDA
- Fully loaded unit economics: what does it cost to acquire, serve, and retain a customer?
- Gross margin by revenue stream (subscription vs. services vs. other)
58### Step 3: Benchmarking
60Compare unit economics to relevant benchmarks:
61- **SaaS Rule of 40**: Growth rate + EBITDA margin > 40%
62- **SaaS Magic Number**: Net new ARR / prior period S&M spend > 0.75x
63- **NDR benchmarks**: Best-in-class >120%, good >110%, concerning <100%
64- **LTV:CAC**: Best-in-class >5x, good >3x, concerning <2x
65- **Gross retention**: Best-in-class >95%, good >90%, concerning <85%
66- **CAC payback**: Best-in-class <12mo, good <18mo, concerning >24mo
Step 3: Benchmarking
Compare unit economics to relevant benchmarks:
- SaaS Rule of 40: Growth rate + EBITDA margin > 40%
- SaaS Magic Number: Net new ARR / prior period S&M spend > 0.75x
- NDR benchmarks: Best-in-class >120%, good >110%, concerning <100%
- LTV:CAC: Best-in-class >5x, good >3x, concerning <2x
- Gross retention: Best-in-class >95%, good >90%, concerning <85%
- CAC payback: Best-in-class <12mo, good <18mo, concerning >24mo
68### Step 4: Revenue Quality Score
70Synthesize into a revenue quality assessment:
72| Factor | Score (1-5) | Notes |
73|--------|-------------|-------|
74| Recurring % | | |
75| Net retention | | |
76| Customer concentration | | |
77| Cohort stability | | |
78| Growth durability | | |
79| Margin profile | | |
80| **Overall** | | |
Step 4: Revenue Quality Score
Synthesize into a revenue quality assessment:
| Factor | Score (1-5) | Notes |
|---|---|---|
| Recurring % | ||
| Net retention | ||
| Customer concentration | ||
| Cohort stability | ||
| Growth durability | ||
| Margin profile | ||
| Overall |
82### Step 5: Output
84- Excel workbook with ARR bridge, cohort matrix, unit economics dashboard
85- Summary slide with key metrics and benchmarks
86- Red flags and areas for further diligence
Step 5: Output
- Excel workbook with ARR bridge, cohort matrix, unit economics dashboard
- Summary slide with key metrics and benchmarks
- Red flags and areas for further diligence
88## Important Notes
90- Always ask for raw customer-level data if available — aggregate metrics can hide problems
91- NDR above 100% can mask high gross churn if expansion is strong enough — always show both
92- Cohort analysis is the single most important view for revenue quality — push for this data
93- Differentiate between contracted ARR and actual recognized revenue
94- For usage-based models, focus on consumption trends and expansion patterns rather than traditional ARR metrics
95- Professional services revenue should be evaluated separately — it's not recurring and margins are typically lower
Important Notes
- Always ask for raw customer-level data if available — aggregate metrics can hide problems
- NDR above 100% can mask high gross churn if expansion is strong enough — always show both
- Cohort analysis is the single most important view for revenue quality — push for this data
- Differentiate between contracted ARR and actual recognized revenue
- For usage-based models, focus on consumption trends and expansion patterns rather than traditional ARR metrics
- Professional services revenue should be evaluated separately — it's not recurring and margins are typically lower
From anthropics/financial-services at 6056506, 2026-10-28. Skills read by DeepSeek V4.1 Flash on 2026-11-04. Summary and techniques by Claude Opus 5.5 on 2026-11-06.