Choosing and Explaining Your Business Model
Your business model is how you turn customer value into sustainable revenue. Present it clearly with compelling unit economics and growth potential.
Common Business Models
Subscription (SaaS)
Recurring monthly or annual payments
Pros:
- • Predictable revenue
- • High customer lifetime value
- • Scalable growth
Key Metrics:
- • Monthly Recurring Revenue (MRR)
- • Churn rate
- • Customer Acquisition Cost (CAC)
Transaction/Marketplace
Take percentage of each transaction
Pros:
- • Scales with customer success
- • Network effects potential
- • Revenue grows with usage
Key Metrics:
- • Gross Merchandise Volume (GMV)
- • Take rate
- • Active users/transactions
Unit Economics Framework
Essential Calculations
Customer Lifetime Value (LTV): Total revenue per customer over their lifetime
Customer Acquisition Cost (CAC): Cost to acquire one new customer
LTV:CAC Ratio: Should be at least 3:1 for healthy business
Payback Period: How long to recover CAC (ideally 8-15 months)