Price a channel before you fund it

What it does

Before you scale a channel, you need its unit case: what one customer costs through it, and what they’re worth. Most founders skip this and find out later, usually from their accountant. The rule that falls out of it is simple: deals with a big contribution can afford expensive channels like outbound and events, and small deals need cheap ones. You don’t send a full-time account executive after a $3K-a-year deal.

What you need

• What you spent on the channel over a period: tools, data, inboxes, ads, and people’s time
• The qualified opportunities it produced in that period, from your CRM
• Your win rate, average deal size and gross margin

How it works

1. 1

   Work out the cost per qualified opportunity

   Add up everything the channel cost over a period, including the hours you or your team put in, at what those hours cost you. Divide by the qualified opportunities it produced. Meetings don’t count, only qualified opportunities.

2. 2

   Turn it into a customer acquisition cost

   CAC = cost per qualified opportunity ÷ win rate. At $1,500 an opportunity and a 25% win rate, each customer costs $6,000 to win.

3. 3

   Work out payback and year-one profit

   Payback is CAC divided by the new MRR each customer brings: how many months of their payments it takes to cover what you spent to win them. Year-one gross profit per dollar of CAC tells you whether the channel makes money in year one.

   Google Sheets: paste into A1

   Cost per qualified opportunity, all-in	1500
   Win rate	25%
   Annual deal size	20000
   Gross margin	80%
   CAC	=B1/B2
   New MRR per deal	=B3/12
   Payback, months of their MRR	=B5/B6
   Year-one gross profit per $1 of CAC	=B3*B4/B5

4. 4

   Find the deal size where it breaks

   Change the deal size until year-one gross profit equals CAC. Below that size, the channel loses money on every customer in their first year. Count churn too: if you lose 2% of customers a month, a year-one customer pays you for about 10.8 months on average, not 12.

5. 5

   Re-run it with a better win rate

   Lift the win rate and CAC drops, and so does the deal size the channel can afford. A better sales process doesn’t just close more deals. It changes which channels you can pay for.

What good looks like

A one-line verdict for each channel: “Outbound costs us $6,000 a customer, pays back in 3.6 months and makes $2.67 of gross profit per dollar in year one. Keep funding it.” And a list of channels you’ve stopped funding because the math said so.

Mistakes to skip

• Leaving your own time out of the cost. It’s the most expensive input most founders have.
• Counting meetings instead of qualified opportunities, which makes every channel look cheaper than it is.
• Judging a channel on a handful of deals. Wait for enough qualified opportunities to trust the win rate.