UNIT ECONOMICS TOOL

by Foresight
See more models at https://foresight.is
hello@foresight.is - @tdavidson
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Copyright 2020 Unstructured Ventures, LLC

LICENSE SUPPORT
License at https://foresight.is/license Support independent entrepreneurs.
Use of this model signifies acceptance of license Contribute at https://foresight.is/learn/unit-economics

GOAL HOW TO USE

Goal of this model is to create an easy way for anyone to model unit economics. Details at
https://foresight.is/learn/unit-economics
Questions, contact me by email (hello@foresight.is), livechat (on website), phone,
WhatsApp or text (all 646.770.0052) - I’m happy to help. I do my best to respond promptly
and advise on how to use the templates for your usecase, and I’m happy to take a look at
your model to make sure you are using it correctly for your situation. You can also
schedule time to chat or a screenshare at https://foresight.is/schedule
1) This is a stand-alone sheet that is also built into the Runway Tool, Standard and Starter Financial
Models at https://foresight.is/models Details on how to use this model is at
https://foresight.is/learn/unit-economics
2) Any number in blue with grey shaded background is an input (i.e. an assumption or data point that
can be changed), anything in black is the result of a formula. Change blue at will, change anything in
black with caution.
3) All cells and formulas are unlocked - as in all Foresight models - so that you can make edits as
needed and completely understand what is going on.
4) All assumptions are illustrative ONLY, do not assume they are market data or standard.
5) As with all templates, feel free to create your own model from scratch, using this as a guide.
6) The model is constructed to fit a wide variety of businesses, and therefore, some sections may or
may not be relevant to yours, everything is open for you to edit and customize for your use.

UPDATES
If you download or purchase this through https://foresight.is, updates are distributed
automatically through my transaction provider (as long as you do not unsubscribe.) If you
purchase through any other website, updates to the model require registration with
Foresight; email Taylor at hello@foresight.is with your payment receipt to register.
DOCUMENTATION
Visit https://foresight.is/learn/unit-economics to get more instructions and videos on how to use the
model, including details on each sheet and key components.

GUIDE SERVICES
Details at https://foresight.is/learn/unit-economics All services: https://foresight.is/services

I offer a range of services to help you get started with the model (Get Started), build a custom model
(Custom), prepare for fundraising (Fundraising Preparation), and transaction advisory support,
primarily around cap tables and valuation. Learn more at the link above.

SKU
unit
economics
tool

foresight.is
hello
learn/unit-economics
License Agreement
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This Investor Presentation contains forward-looking statements regarding our business plans and prospects and finan
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The financial projections in this Investor Presentation present, to the best of management’s knowledge and belief, the
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UNIT ECONOMICS This section is used to communicate your u

Per unit economics Amount Type, Notes

Optional: Hide or show the column notes show

1
Revenues
TBD - this could be average revenue per subscriber or similar $ - Recurring
TBD - this could be a one time implementation fee, or somethin $ - One time 1

TBD - this could be average revenue per order, a recurring mai $ - Transaction
1
Cost of Sales
TBD - for recurring or SaaS, this could be hosting per user pe % 5% Recurring
1
TBD - for transaction, ecommerce, etc, this could be hard costs % 0% One time
TBD - enter in positive numbers % 0% Transaction
1

Optional: Discounts optional, used in case you offer discounts for first subscription or first purchase
Discounts for recurring $ - total, over billing period 1
Discounts for transaction $ - total, first transaction only

0
Churn and Growth, Recurring
Recurring - Period for billing, # of months # - defines the billing cycle, so that cash collection can be separate from revenues. By d
Recurring - Period for churn, growth, # months # - define the length of a cycle for churn. Annual =0 12, monthly = 1
% Growth in Gross Margin per unit, linear annual growth % 0.0% annual rate, linear growth
% Churn, every 1 month % 0.0% % that do not renew 0
Average Customer Lifetime # - # months

0
Timing, One time
Months after acquisition when one-time occurs # - month; this will be zero for upfront, one-time fees, perhaps assume 12 for one-time f
-
- 1 2 3 4 5 6 7 8 9 10
Churn and Growth, Transaction
Transaction - Period for churn, growth, # months # - month Billings less cost of sales, R
% Growth in Gross Margin per unit, linear annual growth % 0.0% annual rate, linear growth Acquisition Costs
Cumulative Net Cash Flow
% Churn, every period % 0.0% % that do not repeat
Average # Repeat Transactions per year # - average lifetime one time purchases, before churn
Average # of Lifetime Transactions # - calculated

Discount Rate % 0.0% optional, assume an annual rate. used if you want to discount the future cash flows, u
K, Recurring # 1.00 optional, only used if using discount rate
K, Transaction # 1.00 optional, only used if using discount rate

Acquisition and Retention Costs

Customer Acquisition Cost (CAC) $ - may need to adjust based on one time discounts, which costs to use from CAC forec
Cost of Retention and Expansion, Recurring $ - For subscription renewals
Cost of Repeat and Expansion, Transaction $ - For repeat transactions

LTV, Recurring $ - LTV = 48 months * gross margin per month, since no churn is assumed the model us
LTV, One time $ - LTV = revenues less cost of sales for this one time cash flow assumed in the first mo
LTV, Transaction $ - LTV = 48 months * gross margin per month, since no churn is assumed the model us
LTV $ - sum of all LTVs
LTV / CAC $ - LTV / CAC, to help measure profitability performance
CAC Payback # 1.00 # of months to payback the customer acquisition costs, based on gross margin

Details for LTV calculations and Cash Flows per month + click on the "+" sign in the margin to see the detail behind the calculations
 This section is used to communicate your unit economics. Please edit for your business.

Per Unit Monthly Cash Flow, and Cumulative Cash Flow

detail for cash flow, payback period, over 48 months
1 1

1 1

1 1

1 1

1 1

s for first subscription or first purchase

1 1

0 0

lection can be separate from revenues. By default this equals the period for churn, but you can overwrite and change it
nnual =0 12, monthly = 1 0

0 0

0 0

-time fees, perhaps assume 12 for one-time fees that happen after 1 year
- -
- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

Billings less cost of sales, Recurring, net of churn Billings less cost of sales, One time, net of churn Billings less cost of sales, Transaction, net of churn
Acquisition Costs Retention Costs Repeat Acquisition Costs
Cumulative Net Cash Flow

you want to discount the future cash flows, using methodology from https://www.forentrepreneurs.com/ltv/

scounts, which costs to use from CAC forecast, and other business-specific issues

onth, since no churn is assumed the model uses the max lifetime as used in the cash flow forecast
s one time cash flow assumed in the first month of forecast
onth, since no churn is assumed the model uses the max lifetime as used in the cash flow forecast

quisition costs, based on gross margin

the detail behind the calculations

CAUSAL

This model is also available in Causal for free at https://foresight.is/causal-unit-economics

You can use the model on the web for your own analysis without a Causal account, and you can also copy a fully-editable version into your free Caus
itable version into your free Causal account.
SCENARIOS

For scenarios, I like to leverage Excel and Google Sheets Add-ins to built out scenarios and analyze outputs based on distributions of assumptions.
One tool I like is Causal - https://causal.app - which also has add-ins for Excel and Google Sheets. They can be installed into your Excel or Google Sh

Here's how to use it (instructions are for Google Sheets, same applies to Excel): https://www.causal.app/blog/google-sheets-add-on
n distributions of assumptions.
lled into your Excel or Google Sheets, just click on the images below.

google-sheets-add-on
CHANGELOG

v1 - August 6, 2020

First version of the stand alone unit economics tool. This is available as a sheet in the Runway Tool, Starter Model, a

Questions, ask hello@foresight.is anytime.