Step 06 of 07 · Profits · free

Revenue Logic Sketch

From Purpose to Profits. Most early-stage business plans are projection decks dressed up as strategy — they answer “how big could this be?” without first answering the simpler question: does the math work for one customer?

Five inputs — ARPU, variable cost, CAC, lifetime, fixed costs. Five derived outputs. One verdict on the LTV/CAC ratio that decides whether paid acquisition can scale your business or quietly bankrupt it.

The discipline

Unit logic, not a projection deck.

A revenue logic sketch isn't a forecast. It answers one question: does the math work for one customer?If the answer is no, growing faster doesn't fix it — it amplifies the loss. The five inputs below give you the contribution per customer, the lifetime value, the LTV/CAC ratio, the payback period, and the customers-per-month you need to clear fixed costs. None of it is precise — all of it is enough to spot whether the business model can survive paid acquisition.

Inputs

ARPUAvg monthly revenue per customer

What an average customer pays you each month.Variable costPer customer per month

COGS, payment fees, hosting, support — anything that scales with each customer.CACOne-time acquisition cost

Marketing + sales spend ÷ customers acquired in the same period.LifetimeAverage customer lifetime

If you don't know yet, estimate from category benchmarks or use 12–24 mo.Fixed monthly costsOverhead — team, office, tools

Everything that doesn't scale per customer.

Derived

LTV / CAC ratio

4.80

LTV/CAC ≥ 3 — paid acquisition can scale this business.

Healthy

Contribution / mo

$48.00

80%

LTV

$864.00

per customer

Payback

3.8 mo

to recover CAC

Break-even

167

customers / mo