Section 06
Financial Model
This is where it gets exciting. The unit economics are genuinely strong -- here's the full picture on revenue, margins, and the path to recurring revenue.
Revenue Projections
Year 1 Revenue by Scenario
Year 1 Revenue Scenarios
| Scenario | Clients | Year 1 Revenue | Tier Mix |
|---|---|---|---|
| Conservative | 12 | $386K | 40/40/20 |
| Moderate | 24 | $772K | 40/40/20 |
| Aggressive | 48 | $1.6M | 40/40/20 |
Mix = Setup / Professional / Enterprise tier distribution
Margin Breakdown
Gross Margin by Tier (at Scale)
Unit Economics: The Math That Matters
That's 99%+ margin on infrastructure alone. The real cost is Jake's time, which is exactly what we want — the business is selling expertise, not hosting.
Client Scaling Path
Revenue & Margin as Clients Scale
Break-Even Analysis
Jake's Implied Hourly Rate
Within market range for AI consulting ($150-$400/hr). The rate is competitive, the value proposition is differentiated.
The Recurring Revenue Flywheel
| Year | One-Time % | Recurring % |
|---|---|---|
| Year 1 | 74% | 26% |
| Year 2 | 55% | 45% |
| Year 3 | 40% | 60% |
By Year 3: Recurring = 58% of Revenue
This transforms the valuation from 1-2x (consulting) to 3-8x (managed services). Recurring revenue businesses are fundamentally more valuable.
Year 3 ARR: $7.9M
Maintenance ARR alone could exceed $7.9M from accumulated managed clients at $2K-$5K/month each. This is the compounding engine.
LTV:CAC Ratio
The benchmark for a healthy SaaS/services business is 3x+ LTV:CAC. Even the lowest tier at 10x is exceptional. These ratios are driven by low customer acquisition cost (warm network + referrals) and high lifetime values from recurring managed service fees.