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Jumbo Cafe – Making Money!
February 23, 2022 @ 12:00 pm – 1:00 pm
In this workshop, we will cover two sets of concepts that are crucial in helping you build a financially sustainable venture: Unit and overall economics.
Unit economics refers to the money you make when you make a sale to your paying customer. We will cover key concepts including pricing architecture and pricing strategy, testing strategies for pricing, estimating cost of goods sold (COGS) or cost of sales (COS) which is the cost basis directly related to selling one unit of your product or service to the customer. We will discuss the life time value of your customer (i.e. the total amount you expect to make from each acquired customer) versus the customer acquisition cost (CAC) or cost of customer acquisition (COCA) – and how LTV/CAC needs to be 3:1 or more for a business to become viable.
We will then turn our attention to overall economics, which includes ways to forecast revenue for the first 1-3 years of your business, ways to estimate expenses, and the most important concepts and parameters that you will need to think structurally and strategically about what type of business you intend to build in the long run. While this looks like a theoretical exercise, the point is not in the actual numbers in the pro-forma profit-and-loss statement or income statement, but in how you think about things and what your assumptions are – because your thought process and assumptions are what institutional investors are looking for when they examine your overall economics.
This workshop is part of Derby Entrepreneurship Center‘s Jumbo Cafe Series on innovating with impact.