20 plain-English definitions — each one linked to the free calculator that puts it to use.
ROI measures how much profit an investment generated relative to its cost, expressed as a percentage.
CAC is the total sales and marketing cost to acquire one new customer, calculated by dividing total spend by the number of customers acquired.
LTV is the total gross profit a business expects to earn from a customer over the entire time they remain a customer.
The LTV:CAC ratio compares what a customer is worth (LTV) to what it costs to acquire them (CAC); 3:1 is the widely cited healthy benchmark for SaaS businesses.
The break-even point is the sales volume — in units or revenue — at which total revenue equals total costs, so profit is exactly zero.
Contribution margin is the revenue left from one unit of sale after subtracting only the variable costs tied to that unit — the amount it "contributes" toward covering fixed costs and profit.
Markup is profit expressed as a percentage of cost; margin is the same profit expressed as a percentage of selling price. They always give different numbers for the same sale.
Burn rate is how much cash a company spends per month, usually split into gross burn (total spending) and net burn (spending minus revenue).
Runway is how many months a company can keep operating at its current burn rate before its cash balance hits zero.
A SAFE (Simple Agreement for Future Equity) is a startup fundraising instrument where an investor gives money now in exchange for equity at a future priced round, instead of receiving shares immediately.
Dilution is the reduction in an existing shareholder's ownership percentage that happens when a company issues new shares to new investors.
VAT (or GST) is a consumption tax added at each stage of production and collected by the seller, ultimately paid by the end consumer.
US self-employment tax is a 15.3% tax covering Social Security and Medicare, paid by freelancers and independent contractors in place of the payroll taxes an employer would normally split with an employee.
The FEIE lets qualifying US citizens living abroad exclude a set amount of foreign-earned income from US federal income tax each year.
APR is the yearly cost of borrowing money, expressed as a percentage, including both the interest rate and most upfront fees — making it the right number for comparing loans with different fee structures.
Amortization is the process of paying off a loan through equal periodic payments, where each payment covers that period's interest plus a growing share of the principal.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of a company's core operating profitability, stripped of financing and accounting decisions.
A cash flow forecast projects how much cash a business will have on hand in future months, based on expected revenue, costs, and the starting cash balance.
Billable hours are time spent on work a client directly pays for; non-billable hours cover everything else a freelancer or agency does to keep the business running.
Payment processors like Stripe and PayPal charge a percentage plus a small fixed fee on every card transaction, which reduces what a seller actually receives from a sale.