Finances

SaaS Financial Modeling & Metrics

A SaaS business is a math machine. If you don't know your numbers, you're guessing. This skill makes unit economics legible — MRR, CAC, LTV, churn, burn rate — clear enough to make decisions, rigorous enough to be trusted.

Core Principles

• A SaaS business is a math machine. If you don't know your numbers, you're guessing.
• Unit economics tell the truth about your business long before your bank account does.
• The only financial model that matters for a solo founder is one that fits on a single spreadsheet and gets updated monthly.
• Revenue is vanity. Margin is sanity. Cash flow is reality.
• Every metric should answer a specific question: "Should I spend more here?" or "Is this working?"

The Quit Number

Before building anything, calculate what it takes to replace your income:

Monthly personal burn (after taxes):
  Rent/mortgage:         $______
  Insurance:             $______
  Food/living:           $______
  Debt payments:         $______
  Everything else:       $______
  Safety buffer (20%):   $______
  = Monthly nut:         $______

Required MRR to quit:
  Monthly nut ÷ 0.70 = $______
  (0.70 accounts for taxes, SaaS costs, and variance)

At your target price point ($X/mo):
  Required MRR ÷ Price = customers needed

Timeline:
  Customers needed ÷ realistic monthly growth rate = months to quit

Reality check: If you need 500+ customers at $29/mo to quit, that's an 18-36 month journey. Plan accordingly.

Personal Constraint Budget

Runway calculation:
  Current savings available for this venture: $______
  Monthly burn while building (no revenue):  $______
  Savings ÷ Monthly burn = months of runway: ______

  Hard deadline: Date you MUST have revenue or go back to employment.

Startup costs (one-time):
  Domain + hosting (year 1):  $100-500
  LLC formation:              $50-500
  Tools (analytics, email):   $0-200/mo
  Paid acquisition test:      $500-1,000
  Legal (if needed):          $500-2,000
  = Total launch cost:        $______

Monthly operating costs (once live):
  Hosting/infra:    $______
  SaaS tools:       $______
  Email service:    $______
  Payment fees:     $______
  = Monthly opex:   $______

Core SaaS Metrics

The Metrics That Matter (and only these)

Monthly Recurring Revenue (MRR)

MRR = Sum of all active monthly subscription amounts

MRR breakdown:
  New MRR:        Revenue from new customers this month
  Expansion MRR:  Revenue from upgrades/seat additions
  Contraction MRR: Revenue lost from downgrades
  Churned MRR:    Revenue lost from cancellations
  Net New MRR:    New + Expansion - Contraction - Churned

Annual Recurring Revenue (ARR)

ARR = MRR × 12
(Only use this once MRR is relatively stable. Don't annualize your first month.)

Customer Acquisition Cost (CAC)

CAC = Total acquisition spend ÷ New customers acquired (in same period)

Include: Ad spend, outreach tools, content costs, your time (value it at $0
for solo founder or at your opportunity cost — be consistent).

By channel:
  SEO CAC:      Content costs ÷ SEO-attributed signups
  Paid CAC:     Ad spend ÷ Paid-attributed signups
  Outreach CAC: Tool costs ÷ Outreach-attributed signups

Lifetime Value (LTV)

Simple LTV:
  LTV = ARPU ÷ Monthly churn rate

Example:
  ARPU = $49/mo, Monthly churn = 5%
  LTV = $49 ÷ 0.05 = $980

With gross margin:
  LTV = (ARPU × Gross margin %) ÷ Monthly churn rate

LTV:CAC Ratio

LTV:CAC = LTV ÷ CAC

Benchmarks:
   5:1   You're probably underinvesting in growth.

CAC Payback Period

Payback = CAC ÷ (ARPU × Gross margin %)

Example:
  CAC = $150, ARPU = $49/mo, Gross margin = 85%
  Payback = $150 ÷ ($49 × 0.85) = 3.6 months

Benchmarks:
   12 months: Dangerous without funding

Churn Rate

Logo churn (customer count):
  Customers lost this month ÷ Customers at start of month

Revenue churn (MRR):
  MRR lost this month ÷ MRR at start of month

Net revenue retention (NRR):
  (MRR at start + Expansion - Contraction - Churn) ÷ MRR at start
  NRR > 100% means existing customers grow faster than they churn.

Benchmarks:
  Logo churn  100%:           Excellent (expansion revenue working)

Unit Economics Calculation

Build this table monthly:

| Metric                    | Month 1 | Month 2 | Month 3 | ... |
|---------------------------|---------|---------|---------|-----|
| New customers             |         |         |         |     |
| Churned customers         |         |         |         |     |
| Total customers (end)     |         |         |         |     |
| MRR                       |         |         |         |     |
| Net new MRR               |         |         |         |     |
| Revenue (collected)       |         |         |         |     |
| COGS (hosting, APIs, etc) |         |         |         |     |
| Gross profit              |         |         |         |     |
| Gross margin %            |         |         |         |     |
| Total acquisition spend   |         |         |         |     |
| CAC                       |         |         |         |     |
| LTV                       |         |         |         |     |
| LTV:CAC                   |         |         |         |     |
| Payback (months)          |         |         |         |     |
| Operating expenses        |         |         |         |     |
| Net profit/loss           |         |         |         |     |
| Cash balance              |         |         |         |     |
| Runway (months)           |         |         |         |     |

Revenue Mix Model

Map your revenue sources:

Primary revenue:
  Monthly subscriptions: $X/mo × estimated customers = $______
  Annual subscriptions:  $Y/yr × estimated customers = $______

Secondary revenue (if applicable):
  Usage-based overage:   Estimated average overage/customer = $______
  One-time setup fees:   $Z × new customers/month = $______
  Consulting/services:   Hours/month × rate = $______

Revenue mix target:
  Recurring %:    ____% (target >80%)
  One-time %:     ____% (keep  10% with no clear fix
- CAC increasing month over month despite optimizations
- Activation rate < 20% (product-market fit problem)
- Revenue plateaus for 3+ months despite active effort
- Cash runway < 3 months with no path to profitability

## Related Skills

- **accounting** — Bookkeeping, tax prep, and financial operations
- **pricing** — Set prices that support healthy unit economics
- **analytics** — Track the product metrics that feed financial models
- **ads** — CAC tracking and paid acquisition budgeting

## Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

- **Author:** [whawkinsiv](https://github.com/whawkinsiv)
- **Source:** [whawkinsiv/solo-founder-skills](https://github.com/whawkinsiv/solo-founder-skills)
- **License:** MIT

Install and usage instructions live in the source repository linked above.