In episode #332, Ben Murray explains why AI companies with high inference costs and lower gross profit margins must scale dramatically faster—up to 6x larger—to match the financial performance of a comparable SaaS business. Using simple financial modeling and the core principles of SaaS economics, Ben breaks down how AI margins, variable COGS, and TAM expansion interact to shape the financial trajectory of AI-native companies.

This episode builds on a recent blog post and downloadable Excel model, both linked in the show notes.

Key Topics Covered

• Why SaaS metrics still apply to AI companies, but with different economic inputs
• The impact of AI inference costs on gross margin and scalability
• Comparing a SaaS company at 80 percent gross margin vs. an AI company at 55 percent
• Why an AI company needs 6x the revenue to generate the same EBITDA
• How lower gross profit changes cash flow, EBITDA, and company valuation
• Why larger TAM and higher ACV potential in AI may offset lower margins
• How attacking labor budgets expands revenue opportunity for AI products
• The myth that SaaS metrics are “broken” for AI companies
• Understanding how COGS scale in SaaS vs. AI and why the math still works
• Evaluating OPEX profiles when modeling scale scenarios
• How to use the downloadable template to test scenarios for your own AI or SaaS business

Why This Matters

This episode is critical for:

• AI founders modeling their unit economics
• SaaS founders embedding AI and needing to understand margin changes
• CFOs, controllers, FP&A leaders, and finance teams navigating AI cost structures
• Investors assessing the scalability and valuation profile of AI companies
• Operators planning cash runway, revenue forecasts, and growth investment
• Understanding these financial dynamics early ensures you can forecast accurately, raise capital more effectively, and prepare for due diligence with confidence.

Resources Mentioned

Full blog post on AI vs. SaaS economics: https://www.thesaascfo.com/the-real-economics-of-saas-versus-ai-companies/

SaaS Metrics Course: https://www.thesaasacademy.com/the-saas-metrics-foundation

In episode #331, Ben breaks down the true financial and economic differences between a SaaS company and an AI company. Inspired by a tweet claiming that “SaaS metrics are broken” and that AI companies generate more absolute profit per customer, Ben puts the theory to the test using real financial modeling.

This episode walks through detailed revenue, gross margin, EBITDA, pricing power, TAM dynamics, and unit economics scenarios to determine whether AI companies actually outperform SaaS businesses.

What This Episode Covers

• Why investors are questioning traditional SaaS metrics when evaluating AI companies
• The importance of recurring revenue fundamentals, whether the company is SaaS or AI
• A side-by-side comparison of a $1M SaaS company versus a $1M AI company
• Gross margin profiles: 80 percent SaaS vs. 55 percent AI
• How EBITDA changes when OpEx is held constant
• The revenue scale required for an AI company to match SaaS gross profit
• The revenue scale required for an AI company to match SaaS EBITDA
• Why AI companies need a TAM that is 6x larger
• How pricing power tied to labor displacement can shift AI unit economics
• Modeling ARPA increases to see when AI gross profit matches SaaS
• Why the underlying P&L structure does not change, but the inputs do
• How founders should think about forecasting and financial strategy when building AI-native products

Why This Matters

• Founders embedding AI into SaaS products
• AI-native startups modeling their financial future
• CFOs and FP&A leaders forecasting revenue, cash, and margins
• Investors evaluating early-stage AI companies
• Operators building long-term company valuation strategies

Ben emphasizes that the P&L, revenue streams, cost structure, and core KPI’s still apply. What changes are the inputs—gross margin profile, pricing power, TAM, ACV, and scalability assumptions.

Resources Mentioned

• Full blog post with financial modeling examples: https://www.thesaascfo.com/the-real-economics-of-saas-versus-ai-companies
• SaaS metrics course: https://www.thesaasacademy.com/the-saas-metrics-foundation

In episode #330, Ben explains one of the most common and costly SaaS finance mistakes: failing to allocate CAC between new and existing customers. This oversight leads to misleading KPI’s, inaccurate CAC payback, flawed LTV to CAC ratios, and unreliable unit economics. Ben walks through exactly how to allocate CAC the right way, how to segment sales and marketing expenses, and why this matters for accurate revenue efficiency metrics and due diligence.

• Why fully burdened sales and marketing expenses are required for accurate CAC

• The danger of pushing all sales and marketing expenses into CAC without allocation

• How to allocate CAC between new customer acquisition and expansion

• How to segment sales teams (hunters vs. farmers) and avoid co-mingled headcount

• Allocating marketing spend based on acquisition channels

• Typical allocation benchmarks for sales (60-80% to new) and marketing (80-90% to new)

• Why accurate CAC is essential for CAC payback, LTV to CAC, and cost of ARR

• How the Cost of ARR provides a blended benchmark without requiring allocation

• Using allocation methods for businesses with multiple product lines or motions

• How to correctly calculate CAC using fully burdened sales and marketing expenses

• How to evaluate marketing economics and sales efficiency with proper allocation

• Why unallocated CAC leads to distorted financial strategy and misleading KPI’s

• How CAC allocation flows into CAC payback period, LTV to CAC, and ARR efficiency

• How to build a repeatable, defensible go-to-market metrics framework that withstands due diligence

• SaaS founders scaling beyond early customer acquisition

• CFOs, FP&A leaders, and finance teams who own KPI modeling

• Operators who need accurate CAC, CAC payback, and LTV calculations

• Investors or advisors assessing revenue efficiency and go-to-market economics

• SaaS Metrics Foundation course covering CAC, LTV, ARR, and unit economics: https://www.thesaasacademy.com/the-saas-metrics-foundation

• Coaching resources on building an accurate, SaaS-specific chart of accounts: https://www.thesaasacademy.com/saas-cfo-coaching