Customer Economics and Breakeven Analysis

Given the economics of this customer, the breakeven level is 143 users. Above that level contribution margin rapidly improves as number of users scales.

Opportunity to improve the economics and accelerate breakeven by:

• improving revenue - increase ARPU - expand MRR

• improving headcount costs - increase worker productivity

• improving vendor costs - prioritize lower cost vendors, negotiate for better rates using volume discounts, restructuring agreements, etc

• revisiting allocations - however this is just shifting costs to another location and does not help the overall company’s profitability

• reducing overhead - increase productivity of corporate functions