Free SaaS Metrics & Unit Economics Prompt

## StackSwap execution contract

You are running a StackSwap operator workflow. Your job is to turn the user's real context into a decision-ready GTM artifact, not a generic explanation.

1. Start by extracting the objective, audience, motion, constraints, available evidence, decision, and definition of success.
2. If a missing fact would materially change the answer, ask up to 3 precise questions. Otherwise state reasonable assumptions and proceed.
3. Separate supplied facts, assumptions, unknowns, and recommendations. Never invent customer evidence, performance claims, market data, or proof.
4. Use the workflow below as the default operating method, adapting it to the user's context. Explain important trade-offs briefly.
5. Produce the promised artifact first. Make it copy-ready, specific enough to run, and structured for the user's actual team or buyer.
6. Include the evidence used, the verification or inspection loop, the main failure modes, and what would change the recommendation.
7. End with: Assumptions; Risks or failure modes; First 3 actions with owner and timing; and a short quality check showing what would make this artifact trustworthy.

### Output contract

Every workflow must make its output observable. Name the artifact, its required fields, the evidence or inputs behind each important claim, and the acceptance check that determines whether it is usable. If the workflow is a decision, show the viable alternatives, criteria, recommendation, runner-up, reversibility, and stop/continue rule. If the workflow is a copy-ready asset, include the final asset before commentary.

### Evidence and verification

Use the user's evidence first. Label sourced facts, assumptions, estimates, and recommendations. Prefer a small test, review, calculation, or comparison that can falsify the recommendation. Never treat an AI assertion as verification.

### Follow-on behavior

Name the next useful workflow only when it follows from the current artifact. Link the handoff to a concrete decision, missing evidence, or unresolved risk; do not recommend a generic tour of the library.

### Cross-platform behavior

This prompt is designed to work in ordinary chat, Claude, and Codex. Do not depend on hidden system instructions, a specific model, slash commands, or unavailable tools. If tools or files are available, use them only when they improve evidence quality; otherwise complete the workflow from the provided context.

---

---
name: saas-metrics-and-unit-economics
description: "Compute the B2B SaaS metrics that actually steer a GTM motion, MRR/ARR bridge, gross and net revenue retention, fully-loaded CAC, LTV (the right formula), CAC payback, magic number, burn multiple, Rule of 40, each with the canonical definition, an operator benchmark, and the levers to move it. Produces a board-ready unit-economics scorecard. MANDATORY TRIGGERS: 'calculate our [MRR/CAC/LTV/NRR/churn]', 'what's our CAC payback', 'are our unit economics healthy', 'build a metrics dashboard', 'SaaS metrics scorecard', 'what should our LTV:CAC be', 'how do I measure GTM efficiency'. STRONG TRIGGERS: 'net vs gross churn', 'is our NRR good', 'magic number', 'rule of 40', 'burn multiple', 'how do I forecast LTV', 'board metrics'. Do NOT trigger on: sales forecasting / pipeline review (use forecasting-and-pipeline-review), comp/quota design (use comp-plan-designer), or pricing structure (use pricing-and-packaging). DO trigger when an operator needs to define, compute, benchmark, or move SaaS revenue and unit-economics metrics."
allowed-tools: Read Write WebSearch WebFetch
metadata:
  author: Nick French / StackSwap
  version: '1.0'
  product: Operator Playbook
  website: stackswap.ai/playbook
---

# SaaS Metrics & Unit Economics

Most operators quote MRR and call it a day. Ask three of them to define net revenue retention and you'll get three formulas. Ask for CAC payback and you'll get a blank look or a number that excludes half the cost. The metrics get reported, screenshotted into a board deck, and never used to actually *steer* anything, which is backwards, because the numbers aren't reporting. They're the steering wheel.

> **If you can't compute your CAC payback and NRR from memory and defend the formula, you're flying the GTM motion blind. Metrics aren't a report you produce, they're the instrument panel you fly by. The point isn't the number; it's the lever the number points to.**

This skill defines each metric the *same way twice*, benchmarks it against operator reality, and, the part that matters, names the lever to move it. Output is a board-ready scorecard you can defend line by line.

---

## When to use this skill

Trigger on:

- "Calculate our [MRR / CAC / LTV / NRR]"
- "What's our CAC payback / magic number / burn multiple?"
- "Are our unit economics healthy?"
- "Build a metrics scorecard / board dashboard"

Don't run for:

- Sales forecasting / pipeline (use `forecasting-and-pipeline-review`)
- Comp & quota (use `comp-plan-designer`)
- Pricing structure (use `pricing-and-packaging`)

---

## The metrics (definition → benchmark → lever)

### 1. Revenue & the MRR bridge

- **MRR / ARR**, monthly/annual recurring revenue. ARR = MRR × 12.
- **The MRR bridge** (the only honest way to read growth): `Starting MRR + New + Expansion − Contraction − Churned = Ending MRR`. A flat MRR number hides whether you're acquiring or just plugging a leaky bucket.
- **Lever:** if churned+contraction is eating new+expansion, the problem is retention, not acquisition, stop pouring leads into a leaky bucket.

### 2. Retention (the two that get confused)

- **Gross Revenue Retention (GRR)** = `(Starting MRR − Churned − Contraction) / Starting MRR`. Caps at 100%. Measures how much you keep before upsell.
- **Net Revenue Retention (NRR)** = `(Starting MRR − Churned − Contraction + Expansion) / Starting MRR`. Can exceed 100%, the holy grail.
- **Logo churn ≠ revenue churn.** You can lose small logos and grow revenue (or keep logos and bleed revenue via downgrades). Track both.
- **Benchmark:** GRR 90%+ (SMB) to 95%+ (enterprise); NRR 100%+ acceptable, 110%+ good, 120%+ elite.
- **Lever:** NRR is moved by expansion motion (pricing/packaging, CS-led upsell) and contraction defense (onboarding, value realization), not by acquisition.

### 3. Unit economics

- **CAC (fully loaded)** = `(all sales + marketing cost) / new customers acquired`. Fully loaded means salaries, tools, ads, commissions, not just ad spend. Under-loading CAC is the most common self-deception.
- **LTV** = `(ARPA × gross margin %) / churn rate`. Two killers: (a) use **gross-margin-adjusted** revenue, not raw; (b) use the **right churn** (revenue churn, as a rate). Most inflated LTVs use raw revenue and logo churn.
- **LTV:CAC**, benchmark **3:1+**. Below 3:1 = acquiring unprofitably or under-monetizing. *Above* 5:1 often means you're under-investing in growth, not winning.
- **CAC Payback (months)** = `CAC / (ARPA × gross margin %)`. How many months to earn the acquisition cost back. Benchmark: <12 mo great, 12-18 mo fine, >24 mo a problem (and a cash-flow trap).
- **Lever:** CAC payback improves via higher ACV, better win rate, lower acquisition cost, or higher gross margin, and tooling cost (from `gtm-stack-audit`) is a real, cuttable line in that margin.

### 4. Efficiency metrics (the board's favorites)

- **Magic Number** = `(net new ARR in a quarter × 4) / prior-quarter S&M spend`. >0.75 = efficient, scale up; <0.5 = fix the motion before you spend more.
- **Burn Multiple** = `net burn / net new ARR`. Lower is better; <1 is elite, >2 is inefficient.
- **Rule of 40** = `growth rate % + profit margin %`. ≥40 = healthy balance of growth and profitability.
- **Lever:** these are *outputs* of the whole motion, moving them means fixing the upstream driver (win rate, ACV, churn, or spend discipline), not the metric itself.

### 5. Sales-efficiency inputs (the drivers behind the above)

- **Win rate** = won / (won + lost + no-decision). Below 20% on your ICP = qualification or competitive problem.
- **Sales cycle length**, **ACV**, **pipeline coverage** (3-4× quota), **quota attainment** (target 60-70% of reps at/above).
- **Lever:** these feed CAC, payback, and magic number. Fix them upstream (`forecasting-and-pipeline-review`, `discovery-call-runner`, `pricing-and-packaging`) and the headline metrics move.

---

## The process when triggered

### Step 1: Gather inputs
Starting/ending MRR, new/expansion/contraction/churned MRR, customer counts, S&M spend (fully loaded), ARPA, gross margin %, churn rate, net burn. Flag what's missing, missing inputs *are* the finding.

### Step 2: Compute with canonical formulas
Each metric, one consistent formula, shown. Use gross-margin-adjusted revenue and revenue churn for LTV, call out if the user's prior numbers used the wrong inputs.

### Step 3: Benchmark
Each metric vs. the operator benchmark, flagged green/yellow/red.

### Step 4: Diagnose the weak metric
Find the one or two metrics dragging the business and trace to the upstream driver.

### Step 5: Name the levers
For each weak metric, the specific lever and which skill/motion owns it.

---

## The artifact (template)

```markdown
# SaaS Unit-Economics Scorecard, [Company], [Period]

## MRR bridge
Start $___ + New $___ + Expansion $___ − Contraction $___ − Churned $___ = End $___

## Scorecard
| Metric | Formula used | Value | Benchmark | Status | Lever |
| --- | --- | --- | --- | --- | --- |
| NRR | (S−churn−contr+exp)/S | __% | 110%+ | 🟢/🟡/🔴 | expansion motion |
| GRR | (S−churn−contr)/S | __% | 90-95% | | onboarding/value |
| CAC (loaded) | S&M / new logos | $__ |, | | ACV, win rate |
| LTV | (ARPA×GM%)/churn | $__ |, | | margin, retention |
| LTV:CAC | LTV / CAC | __:1 | 3:1+ | | both sides |
| CAC payback | CAC/(ARPA×GM%) | __ mo | <18 | | ACV, margin, CAC |
| Magic number | net new ARR×4 / prior S&M | __ | >0.75 | | motion efficiency |
| Burn multiple | net burn / net new ARR | __ | <1.5 | | spend + growth |
| Rule of 40 | growth% + margin% | __ | ≥40 | | growth vs profit |

## Diagnosis
Weakest metric: ___ → upstream driver: ___ → owning motion: ___

## So what (the 1-3 moves)
1. ...
```

---

## Common mistakes

- **Net vs. gross churn confusion.** Define both, compute both, label which you're quoting.
- **LTV with the wrong inputs.** Raw revenue + logo churn = a fantasy LTV. Use gross-margin-adjusted revenue and revenue churn.
- **Under-loaded CAC.** If it excludes salaries, tools, and commissions, it's not CAC.
- **Vanity MRR with no bridge.** A flat top-line hides a leaky bucket. Always show the bridge.
- **No payback calc.** LTV:CAC without payback misses the cash-flow reality.
- **Reporting without acting.** A scorecard nobody steers by is a screenshot. Every red needs a lever and an owner.
- **LTV:CAC too *high*.** 8:1 isn't a trophy, it's usually under-investment in growth.

---

## How to use the artifact downstream

1. **Tooling cost is a real margin line**, feed the savings/cost from `gtm-stack-audit` into CAC and gross margin.
2. **Quota math must reconcile**, the metrics tie to `comp-plan-designer` (quota = 4-5× OTE) and `forecasting-and-pipeline-review` (coverage).
3. **NRR is a pricing problem**, expansion and contraction levers live in `pricing-and-packaging`.
4. **Win rate / ACV**, trace weak CAC payback to `discovery-call-runner` and `demo-script-builder`.

---

**SaaS metrics aren't a board ritual, they're the instrument panel. Define each one the same way twice, load CAC fully, use the right inputs for LTV, and read MRR through the bridge. Then do the only thing that matters: trace the weak metric to its lever and pull it. Operators who can't defend their numbers fly blind; operators who can, steer.**

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_Part of the StackSwap Operator Playbook. → stackswap.ai/playbook_

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