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Arcane

Stealth • 3m

Profitability Metrics These are the stages of profitability every founder should be familiar with (Refer the table below) In the beginning, Start with Contribution margin (CM)- measure if your revenue covers variable costs. Next, target transaction-level profitability (revenue exceeding variable costs per transaction). Then, shift your focus towards achieving a positive EBITDA (Operating Profit before deducting Interest and Non cash expenses) Ultimately, as growth happens, you achieve a net profit where you cover your non operating expenses as well. Where do you stand currently? Also, share any additional insight you would like to offer.

3 replies7 likes

Replies (3)

Anonymous 3

Stealth • 3m

Achieving profitability at the transaction level was a huge milestone for us. Once you’re there, every sale adds value and keeps cash flow positive. Highly recommend founders prioritize this stage

0 replies1 like

Anonymous 2

Stealth • 3m

Honestly, I feel like a lot of founders overthink these metrics. Just focus on growing your revenue and keeping expenses in check, and these profitability metrics will fall in line

0 replies1 like

Anonymous 1

Stealth • 3m

I completely agree with this breakdown! Starting with Contribution Margin (CM) is essential if your basic variable costs aren’t covered, you’re just bleeding money from day one

0 replies1 like

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