F13 — Merchant Economics
The Merchant Side of the Model
This page answersWhat is a merchant worth, and what does it cost to sign one?
Merchant subscription revenue is recurring, contracted and higher quality than transaction revenue. It is also the hardest thing to build.
Assumptions are shared across every financial page — change one, all outputs recalculate.
127 — Merchant funnel
From listed venue to paying subscriber
Funnel
MODEL OUTPUTThe funnel is solved backwards from the paying-merchant assumption, so the listed-venue requirement is a MODEL OUTPUT: it shows how large the directory must be to support the subscription base.
Assumptions
ASSUMPTION128–129 — ARPU and ARR
Subscription revenue build
Monthly merchant ARPU
Merchant ARR
20,000 paying merchants
Implied annual logo churn
From 2.0% monthly
Merchant LTV : CAC
ARPU sensitivity
ASSUMPTIONMerchant unit economics
130 — Sensitivity
ARPU × churn on merchant lifetime value
| 0.8% | 1.5% | 2% | 3% | 5% | |
|---|---|---|---|---|---|
| US$35 | US$3,413 | US$1,820 | US$1,365 | US$910 | US$546 |
| US$55 | US$5,363 | US$2,860 | US$2,145 | US$1,430 | US$858 |
| US$75 | US$7,313 | US$3,900 | US$2,925 | US$1,950 | US$1,170 |
| US$100 | US$9,750 | US$5,200 | US$3,900 | US$2,600 | US$1,560 |
| US$150 | US$14,625 | US$7,800 | US$5,850 | US$3,900 | US$2,340 |
Outlined cells fall below a 3× LTV : CAC threshold at the current merchant CAC of US$340.
Quality
Why merchant revenue is worth more per dollar
| Attribute | Merchant subscription | Consumer transaction |
|---|---|---|
| Recurrence | Contracted monthly | Episodic, seasonal |
| Predictability | High — churn is the only variable | Low — depends on trip and service frequency |
| Gross margin | Very high — software delivery | Moderate — payments and support |
| Valuation treatment | ARR multiple | Revenue or GMV multiple at a discount |
| Acquisition cost | US$340 per merchant | US$14 per user |
Merchant counts on this page are subscription-paying merchants only. Listed and claimed venues generate no revenue in the model and are never described as customers.
Investor implication
Merchant ARR of US$15.6M at 22% annual churn is the line an acquirer will underwrite most closely. If churn cannot be held below the modelled level, the correct response is a lower valuation multiple — not a higher user target.