Revenue

Presentation for
Presented by Mike Lingle

// Mentor and Advisor

// Entrepreneur

mike@rocketproforma.com
 Videos and free resources at:
RocketProForma.com/resources

Founder Institute Discount Code:

FI30
Get revenue early
Are you
running a
business?
“
Customers pay you
—vs—
Users hang out for free

— Pro Tip
Can you make your
first sales today…
from a pretotype?
“People’s opinions are
worth zero points”
Even yours.
Secrets to success:
1. Behavior change
2. Monetization
 What Are
Unit Economics?
Presented by Mike Lingle

// Mentor and Advisor

// Entrepreneur

mike@rocketproforma.com
Unit Economics

Will your business work?

Method 1: Per Unit
Method 2: Per Customer
Lemonade Stand

Revenue per Unit: $2.00

Variable Costs: $0.75
Ingredients
Cup
Napkin

_______
Contribution Margin: $1.25
Breakeven Calculation

Contribution Margin: $1.25

Fixed Costs: $100.00
How many units do we need to sell to
cover our costs?
$100.00 / $1.25
= 80 units
Two Paths
Revenue Growth
(Profits?) (At a Loss?)
Path for World
Domination
Rapid growth in profitable revenue
1. Get your unit economics working
2. Conquer one area
3. Expand to more areas
 Unit Economics
Method #2: Per Customer
Per Customer
Unit Economics
LTV
Lifetime Value of Each Customer

CAC
Customer Acquisition Cost
“
Aim for an LTV that’s at least
3 times your CAC

Pro Tip
LTV
LTV vs. CAC Examples

LTV = $90 LTV = $110 LTV = $360

CAC = $100 CAC = $100 CAC = $100
-$10 $10 $260

LTV = -0.1x CAC LTV = 0.1x CAC LTV = 3.6x CAC

Lifetime Value (LTV)

Transaction Business
● Initial purchase $
● Plus repeat purchase(s) $
● Plus upsells $
● Minus COGS $
Lifetime Value (LTV)

Transaction Business
Initial purchase $ 3
Plus repeat purchases over lifetime $100
Plus upsells over lifetime $ 25
Minus COGS over lifetime ($ 38) < 70% Gross Margin
Lifetime Value (LTV) $ 90
Lifetime Value (LTV)

Subscription Business
● Subscription $
● Times lifespan
● Plus upsells $
● Minus COGS $
Lifetime Value (LTV)

Subscription Business
Subscription $12.99
Times lifespan 36 Months
Plus upsells during lifetime ?
Minus COGS during lifetime ($285) < 39% Gross Margin
Lifetime Value (LTV) $182
How Did I Find Netflix’s
Gross Margin?
“
A good starting guess for lifetime is
between 12 and 24 months

Pro Tip
Monthly Churn

Monthly Churn = 1 / Lifetime in Months

Lifetime = 24 Months
Monthly Churn = 4.17%

Lifetime = 18 Months
Monthly Churn = 5.56%
CAC
Global CAC
(Cost to Acquire a Customer)

All sales & marketing costs per period

— divided by —

# of new customers per period

Global CAC Examples

$1,000 S&M per month $1,000 S&M per month

— divided by — — divided by —

100 New Customers 5 New Customers

CAC = $10 CAC = $200

Instagram Ads CAC
(Cost to Acquire a Customer)

Cost per Click (CPC)

— divided by —

Conversion Rate (CVR)

Insta Ads CAC Examples

$1 per Click $1 per Click

— divided by — — divided by —

2% Conversion Rate 3% Conversion Rate

CAC = $50.00 CAC = $33.33

Find Your CAC for $70
Find Your CAC

$0.60 per Click

— divided by —

4% Conversion Rate

CAC = $15.00
Q&A