Unit Economics Analysis
OfficialFreeEvaluate and optimize your business's financial health.
Free · Opens the source repo
What Unit Economics Analysis does
Unit Economics Analysis is a comprehensive skill designed to help businesses, particularly those in the software and SaaS sectors, analyze their financial metrics in detail. By focusing on key performance indicators such as Annual Recurring Revenue (ARR), Customer Acquisition Cost (CAC), and Lifetime Value (LTV), this skill provides a structured approach to understanding the economics of customer relationships. It is particularly beneficial for businesses that rely on recurring revenue models, allowing them to assess revenue quality and customer profitability effectively.
The skill guides users through a systematic workflow that begins with identifying the business model, whether it be SaaS, recurring services, transaction-based, or a hybrid. This foundational step is crucial as it tailors the subsequent analysis to the specific revenue streams of the business. Users will then delve into core metrics, examining ARR breakdowns, customer economics, retention rates, and cohort analyses. This thorough examination helps businesses identify trends and potential areas for improvement in their revenue generation strategies.
In addition to analyzing core metrics, the skill emphasizes benchmarking against industry standards, such as the SaaS Rule of 40 and LTV:CAC ratios. These benchmarks provide context for the metrics being analyzed, allowing businesses to gauge their performance relative to peers. Finally, the skill culminates in a revenue quality score assessment, synthesizing the findings into actionable insights that can guide strategic decisions. The output includes detailed reports and visualizations, making it easier for stakeholders to understand the financial health of the business.
This skill is ideal for financial analysts, business strategists, and SaaS founders who need to make informed decisions based on solid financial data. It is particularly useful during funding rounds, strategic planning sessions, or when assessing the viability of customer acquisition strategies.
When to use it
Use this skill when evaluating the financial performance of SaaS or subscription businesses, particularly when assessing customer acquisition and retention strategies.
When not to use it
This skill may not be suitable for one-time transaction businesses or those without a recurring revenue model, as it focuses primarily on metrics relevant to subscription-based economics.
What you can build with it
Evaluating SaaS Business Performance
A SaaS company uses this skill to analyze its ARR and customer retention metrics before a funding round, ensuring they present solid financial health to investors.
Assessing Customer Acquisition Strategies
A marketing team employs the skill to calculate CAC and LTV for different customer segments, allowing them to optimize their acquisition strategies based on profitability.
Benchmarking Against Industry Standards
A financial analyst uses the skill to compare their company's unit economics against industry benchmarks, identifying areas for improvement and strategic focus.
How to install Unit Economics Analysis
View source1. Install with the skills CLI
npx skills add anthropics/financial-services/unit-economics --agent claude-code2. Or install it manually
Download the skill folder and drop it into ~/.claude/skills/ for all projects, or .claude/skills/ to scope it to one repo. Restart Claude Code so it picks up the new skill.
Anthropic's agentic coding CLI, and the reference implementation of Agent Skills. Drop a skill folder into ~/.claude/skills and Claude Code loads it automatically whenever a task matches the skill's description. Claude Code docs
Inside SKILL.md
Written by anthropicsUnit Economics Analysis
Workflow
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
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)
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
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 |
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
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
Frequently asked questions about Unit Economics Analysis
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