Pitching to investors · Lesson 3
Business model and unit economics
Show how one customer turns into profit, and how that repeats.
A business model explains who pays, for what, how often, and how much. Unit economics shows whether one customer is profitable once you count what it costs to win and serve them. Investors look at a few numbers: revenue per customer, gross margin (revenue minus direct delivery cost), customer acquisition cost, and how long customers stay.
A simple rule: the value of a customer over their lifetime should be at least three times what it costs to acquire them. If it is lower, growth just burns cash faster. If you do not have enough history, give your best estimate, explain your assumptions, and say how you will test them.
For services businesses, be honest about the limit: revenue grows with people. Show how you protect margin as you hire — standard methods, templates, junior-senior mix, or productised offers — so growth does not simply add cost.
Example — Hypothetical: one client's numbers
A retained advisory client pays ₦1.2m per month. Delivery staff cost ₦700k, giving a 42% gross margin. Winning the client took ₦900k in proposal time and events. Clients stay about 20 months, so lifetime gross profit is ₦10m — over ten times the acquisition cost.
Try this
For one typical customer, write down: price, direct cost, cost to win them, and how long they stay. Calculate lifetime gross profit.
Reflect
Which number in your unit economics are you least sure of, and how could you test it in 30 days?