04 — Unit Economics
Unit economics are the discipline that turns the capacity model (§03) into a business. We measure at three units: per cohort, per coach, per client account.
Per-cohort P&L (12-week hybrid, baseline)
| Line | Amount | Notes |
|---|---|---|
| Revenue | £45,000 | Sprint 6 §04 mid-tier |
| Coach delivery cost (60 hrs × £125 blended) | £7,500 | Mix of employed + associate |
| Delivery ops allocation (PM, dashboard, materials) | £4,200 | ~9% of revenue |
| Evidence allocation (telemetry, reporting) | £2,300 | ~5% of revenue |
| Safeguarding allocation | £1,400 | DSL time + tooling |
| Tech / platform allocation | £1,800 | Hybrid stack, AI gateway |
| Direct cohort costs (venue, travel where billed in) | £1,800 | Often passed through; net here |
| Direct cost subtotal | £19,000 | |
| Cohort gross profit | £26,000 | |
| Cohort gross margin | 57.8% | Target ≥ 55% (Sprint 9 §10 KPI #11) |
Per-coach economics (Senior Coach, employed)
| Line | Amount/year |
|---|---|
| Fully-loaded cost (salary, NI, pension, supervision, CPD, kit) | £85,000 |
| Sellable hours/year (22 × 46 weeks × 70% utilisation) | 708 hrs |
| Effective delivery revenue at £125/hr | £88,500 |
| Contribution before overhead | £3,500 |
This is intentionally lean — employed coaches are slightly below break-even on delivery alone, which is fine because they carry quality, supervision support, and cohort safety. Associates run at a higher per-hour margin but lower retention. Mix policy:
- Employed share of delivery hours: 55–70% (quality + retention)
- Accredited associate share: 30–45% (flex + margin)
- Subcontracted-only (no accreditation): 0% — non-negotiable
Per-account LTV / CAC
ACV (average contract value, year 1) = £180,000 # ~4 cohorts
Gross margin = 58%
Annual gross profit per account = £104,400
Net retention (renewal × expansion) = 110%
Account lifetime (years) = 4.2
LTV (gross-profit basis) = £104,400 × Σ(1.10^t × discount) ≈ £520,000
CAC (blended sales + marketing per won account, S2) = £85,000
LTV / CAC ≈ 6.1×
CAC payback (months) ≈ £85,000 / (£104,400 / 12) ≈ 9.8 months
Guardrails:
- LTV / CAC ≥ 4× at the company level. Below 3× we are buying revenue, not building a business.
- CAC payback ≤ 18 months for enterprise; ≤ 12 months for mid-market.
- Net retention ≥ 100%. Negative net retention means the product or delivery is leaking; pricing won't save it.
Discount discipline
From the RACI (Sprint 9 §02): discounts > 10% go to COO; > 20% to CEO. Modelled effect:
| Headline discount | Effective gross margin | Effective LTV/CAC |
|---|---|---|
| 0% | 58% | 6.1× |
| 10% | 53% | 5.0× |
| 20% | 47% | 3.7× |
| 30% | 40% | 2.5× |
A 30% discount almost halves LTV/CAC. We grant it only when the deal is genuinely strategic (logo, beachhead market, evidence partner) and we record the rationale in the Decision Log.
Channel economics (preview of §07)
| Channel | CAC | Payback | When to use |
|---|---|---|---|
| Direct enterprise | £85k | ~10 mo | Tier 1 / 2 accounts, evidence-led |
| Partner referral (rev-share 15%) | £30k effective | ~5 mo | Adjacent advisors (EAPs, HR consultancies) |
| Channel partner (rev-share 25–35%) | £15k effective | ~3 mo | International beachheads (§05/§06) |
| Inbound (content + evidence) | £20k | ~6 mo | Always-on; compounds over years |
How we use this file
- Pricing changes (Sprint 6 §04) re-run the per-cohort P&L before being approved
- Hiring scorecards (§02) cite the per-coach economics they assume
- Annual plan (§10) is bottom-up assembled from this model
- Board MBR (Sprint 9 §04) reports the realised vs modelled margin