When you walk into an investor meeting, they’ll politely skim through your vision, market size, and pitch deck. But the moment you show your unit economics, the tone changes. Why? Because this is the true test of whether your business makes sense — not just today, but at scale.
What Are Unit Economics?
Unit economics simply measure the profitability of serving one customer (or one transaction). Think of it as:
For every ₹1 I spend to acquire a customer, how much do I earn back, and over what time period?
The two most important numbers are:
- CAC (Customer Acquisition Cost) – How much it costs to acquire a customer.
- LTV (Customer Lifetime Value) – How much profit you make from that customer over their lifetime.
Why Investors Care About It
- Scalability: If your LTV >> CAC, scaling makes sense.
- Capital Efficiency: Investors want to see if their money fuels growth or losses.
- Sustainability: Businesses with poor unit economics eventually collapse, no matter how fancy the growth charts look.
Example 1: Food Delivery Startup
Let’s say you run a food delivery startup.
- Average Order Value (AOV): ₹400
- Gross Margin per order: 20% → ₹80
- Average customer orders: 3 times a month → 36 times a year
- Annual Gross Profit per customer = ₹80 × 36 = ₹2,880
Now, your CAC (cost to acquire one new customer through ads/offers/referrals) is ₹1,200.
LTV = ₹2,880, CAC = ₹1,200 → LTV/CAC = 2.4x
Investors like to see at least 3x. You’re close — but need to improve margins or increase frequency.
Example 2: SaaS Company
Imagine you run a B2B SaaS product.
- Subscription Fee: $100/month
- Gross Margin: 80% → $80/month
- Average customer stays: 24 months
- LTV = $80 × 24 = $1,920
CAC (sales + marketing cost to acquire one customer) = $400
LTV = $1,920, CAC = $400 → LTV/CAC = 4.8x
This is a very attractive ratio. An investor knows pouring more money into marketing can multiply growth efficiently.
How to Present Unit Economics in Your Pitch
When adding this to your pitch deck or financial model, make it crisp and visual:
- CAC – show how it’s calculated (ads + salaries + discounts / new customers).
- LTV – show average spend, gross margin, churn rate.
- Payback Period – how many months to recover CAC (shorter is better, ideally < 12 months).
Contribution Margin – profit after variable costs, per unit.
Example slide snippet:
| Metric | Value |
| CAC | $400 |
| LTV | $1,920 |
| LTV/CAC | 4.8x |
| Payback Period | 5 months |
Final Thoughts
Your vision excites investors. Your market size attracts them. But your unit economics convinces them.
If your numbers show a strong LTV/CAC ratio, you’re telling investors: “This isn’t just a good idea. This is a money-making machine.”
And if your unit economics are weak? That’s still fine — the model helps you find what to fix before you’re in front of investors.
Need help calculating and presenting your unit economics for fundraising? I help founders build clear, investor-ready financial models. Let’s connect.