In the SmartUp methodology, Customer Value and Unit Economics focus on the relationship between Customer Acquisition Cost (CAC) and the revenue or profit generated per customer. Stern emphasizes that acquiring a customer is only worthwhile if the profit exceeds the CAC and the volume of customers supports a viable business model. For instance, a CAC of $12,000 with a profit of $20,000 per customer may be technically profitable but insufficient if only one customer is acquired every two months.
The SaaS renewal model demonstrates the importance of recurring revenue and churn. A customer paying $10,000 annually contributes more value if they renew consistently, whereas high churn drastically reduces lifetime profit and increases the time needed to reach profitability.
In acquisition contexts, Stern uses “Price Per User” as a proxy for customer value. This approach evaluates how much an acquirer is willing to pay per user, reflecting the expected lifetime contribution or strategic value. For example, Microsoft paid ~$60 per LinkedIn user, Facebook paid ~$45 per WhatsApp user, and Google paid ~$22 per Waze user.
Strategically, understanding Customer Value and Unit Economics enables founders to optimize CAC, pricing, retention, and growth strategies to maximize profitability and attractiveness to investors.
