---
created: 2026-03-12
source: Rivet
tags: [agent-archive, rivet]
---

# RateRight Unit Economics Model

**Date:** 2026-02-07
**Audited by:** Rivet (Financial Agent)
**Currency:** AUD unless noted

---

## The Product

- **Contractor pays:** $50 flat fee per individual hire, $100 per crew hire
- **Worker pays:** $0 (ALWAYS free for workers)
- **Payment method:** Stripe (card on file required to post)

---

## Per-Hire Cost Breakdown: Individual ($50 Hire)

### Direct Variable Costs Per Hire

| Cost Item | Per Hire | Assumption |
|-----------|----------|------------|
| **Stripe processing** | $1.15 | 1.7% + $0.30 on $50 = $0.85 + $0.30 |
| **SMS notifications (contractor)** | $0.08 | 1 SMS: match confirmation |
| **SMS notifications (worker)** | $0.08 | 1 SMS: job offer notification |
| **SMS notifications (extras)** | $0.08 | 1 SMS: completion/rating prompt |
| **Push notifications** | $0.00 | Free (FCM/APNs) |
| **API compute (matching)** | $0.01 | Marginal server cost per request |
| **Total Variable Cost** | **$1.40** | |

### Gross Profit Per Individual Hire

| Metric | Value |
|--------|-------|
| Revenue | $50.00 |
| Variable costs | -$1.40 |
| **Gross Profit** | **$48.60** |
| **Gross Margin** | **97.2%** |

### Contribution Margin (After Allocated Fixed Costs)

At 20 hires/month:
| Metric | Value |
|--------|-------|
| Revenue (20 × $50) | $1,000/mo |
| Variable costs (20 × $1.40) | -$28/mo |
| Fixed costs (optimized) | -$73/mo |
| **Contribution** | **$899/mo** |
| **Contribution Margin** | **89.9%** |

---

## Per-Hire Cost Breakdown: Crew ($100 Hire)

### Direct Variable Costs Per Crew Hire

| Cost Item | Per Hire | Assumption |
|-----------|----------|------------|
| **Stripe processing** | $2.00 | 1.7% + $0.30 on $100 = $1.70 + $0.30 |
| **SMS notifications (contractor)** | $0.08 | 1 SMS: match confirmation |
| **SMS notifications (workers)** | $0.24 | 3 SMS: offers to 3 workers (average crew) |
| **SMS notifications (extras)** | $0.16 | 2 SMS: completion/rating for contractor + crew lead |
| **API compute** | $0.02 | Slightly more compute for multi-match |
| **Total Variable Cost** | **$2.50** | |

### Gross Profit Per Crew Hire

| Metric | Value |
|--------|-------|
| Revenue | $100.00 |
| Variable costs | -$2.50 |
| **Gross Profit** | **$97.50** |
| **Gross Margin** | **97.5%** |

---

## Blended Unit Economics

Assume 70% individual / 30% crew mix:

| Metric | Blended Per Hire |
|--------|-----------------|
| Blended revenue | $65.00 |
| Blended variable cost | $1.73 |
| **Blended gross profit** | **$63.27** |
| **Blended gross margin** | **97.3%** |

---

## Breakeven Analysis

### Current Burn Rate (Unoptimized, Business Only): ~$97/mo

| Hire Type | Hires to Break Even | Frequency |
|-----------|-------------------|-----------|
| Individual only ($50) | **2 hires/month** | 1 every 2 weeks |
| Crew only ($100) | **1 hire/month** | 1 per month |
| Blended (70/30) | **2 hires/month** | 1 every 2 weeks |

### Including Claude Max ($197/mo)

| Hire Type | Hires to Break Even | Frequency |
|-----------|-------------------|-----------|
| Individual only ($50) | **4 hires/month** | 1 per week |
| Crew only ($100) | **2 hires/month** | 1 every 2 weeks |
| Blended (70/30) | **3 hires/month** | ~1 per week |

### 🎯 Michael's Napkin Math Validated
His estimate of $500-1k/month break-even was **conservative** (in a good way). Real break-even on business costs alone is closer to **$100-130/month** (2-3 blended hires). Including Claude Max, it's ~$200/month (3-4 hires).

The $500-1k target gives **significant margin** for reinvestment, savings, or covering unexpected costs.

---

## Revenue Projections (3 Scenarios)

### Conservative: 10 hires/month by Month 3

| Month | Individual (70%) | Crew (30%) | Revenue | Costs (fixed+var) | Net Profit |
|-------|-----------------|-----------|---------|-------------------|------------|
| 1 | 2 | 1 | $200 | $100 | $100 |
| 2 | 5 | 2 | $450 | $107 | $343 |
| 3 | 7 | 3 | $650 | $112 | $538 |
| **Q1 Total** | | | **$1,300** | **$319** | **$981** |

### Base: 30 hires/month by Month 3

| Month | Individual (70%) | Crew (30%) | Revenue | Costs (fixed+var) | Net Profit |
|-------|-----------------|-----------|---------|-------------------|------------|
| 1 | 5 | 2 | $450 | $107 | $343 |
| 2 | 14 | 6 | $1,300 | $125 | $1,175 |
| 3 | 21 | 9 | $1,950 | $138 | $1,812 |
| **Q1 Total** | | | **$3,700** | **$370** | **$3,330** |

### Optimistic: 100 hires/month by Month 3

| Month | Individual (70%) | Crew (30%) | Revenue | Costs (fixed+var) | Net Profit |
|-------|-----------------|-----------|---------|-------------------|------------|
| 1 | 14 | 6 | $1,300 | $125 | $1,175 |
| 2 | 35 | 15 | $3,250 | $157 | $3,093 |
| 3 | 70 | 30 | $6,500 | $220 | $6,280 |
| **Q1 Total** | | | **$11,050** | **$502** | **$10,548** |

---

## When Does Michael Stop Needing Dad's Support?

### Assumptions
- Michael's construction salary covers personal living expenses
- "Dad's support" covers startup costs (~$100-200/mo business costs)
- Independence = startup costs self-funded from revenue

| Scenario | Self-Sustaining At | Time to Get There |
|----------|-------------------|-------------------|
| Conservative | 3-4 hires/month | Month 1-2 |
| Base | Already from Month 1 | Immediately |
| Optimistic | Already from Day 1 | Immediately |

**The honest answer:** Even 2-3 hires per month covers all business costs. That's absurdly achievable. The real question isn't "when does RateRight break even" — it's **"how fast can you get the first 3 customers."**

---

## Cash Runway (Zero Revenue)

| Scenario | Monthly Burn | Kimi Balance Left | Months Until Kimi Empty | Monthly Cash Needed |
|----------|-------------|-------------------|------------------------|-------------------|
| Optimized | ~$73/mo | $200 (pre-loaded) | ~10 months | ~$73/mo |
| Current | ~$97/mo | $200 (pre-loaded) | ~8 months | ~$97/mo |
| With Claude Max | ~$197/mo | $200 | ~8 months | ~$197/mo |

**At $73-97/month burn with zero revenue, this can run for years on modest family support.** There is no cash crunch. The risk isn't running out of money — it's running out of time/energy before product-market fit.

---

## Key Risks & Flags

### 🟢 Low Risk
- **Burn rate is tiny.** $73-97/mo is one of the cheapest startups possible.
- **Gross margins are absurd.** 97%+ per hire. This is a pure software play.
- **Break-even is trivially low.** 2-3 hires/month covers everything.

### 🟡 Medium Risk
- **Stripe fees at scale.** At 100+ hires/month, Stripe takes ~$115-200/mo. Still manageable.
- **Supabase/Vercel free tier limits.** Will need ~$45/mo upgrade at ~50-100 active users.
- **SMS costs at scale.** 1000 hires/month = ~$100/mo SMS. Mitigate with push notifications.

### 🔴 Watch Closely
- **Zero revenue currently.** All costs funded by savings/family. Clock is ticking on morale, not money.
- **Claude Max dependency.** If Anthropic raises prices or changes Max terms, it's a $100/mo swing.
- **No user validation yet.** 26 research docs, 0 paying customers. The financial model means nothing until someone pays $50.

---

*Next: CAC/LTV Analysis → memory/plans/financial/cac-ltv.md*
*Next: Revenue projection model → memory/plans/financial/revenue-projections.md*