Brokerage Unit Economics: The Four Numbers Behind Every Growth Plan

Four figures, one question

The question is: for each funded trader, what do I spend, what do I earn and how long until I'm ahead? The figures that answer it are CAC (everything spent to get a funded trader), ARPU (average monthly revenue per funded trader), payback period (months to earn back CAC) and LTV (total expected revenue over the trader's life).

Most brokers undercount CAC because they leave out bonuses, rebates and onboarding costs, which are acquisition spend in everything but name. Once you have an honest CAC, compare it with LTV. If LTV isn't at least three times CAC, you are running on a treadmill that gets faster as you spend more.

Revenue is rarely spread evenly

Revenue comes from spreads, markups, commissions, swaps and, for B-book flow, trading results. Scalpers produce volume on thin margins, while position traders produce less volume but more durable income.

Look hard at concentration. In many books a small group of traders delivers most of the revenue. If your top fifty clients make up sixty percent of income, your 'diversified retail base' is a narrative and your retention plan needs to match the real picture.

Costs that slip through

Beyond licenses, liquidity and staff, watch for failed deposits (a 5% failure rate behaves like a 5% tax on acquisition), bonus abuse, chargebacks and the cost of toxic flow you failed to spot early.

Then there is churn. The average retail trader stays active for months, not years, so each additional month of retention is worth more than almost any acquisition tweak, because it carries no CAC at all.

Also separate reactivation spend from new-trader CAC. Win-back campaigns and dormant-account bonuses are paid for traders you already converted once, and folding them into one blended number makes acquisition look better than it is.

Make payback a rule, not a hope

Pick a maximum payback period before spending, commonly twelve months for retail and less for prop. Apply it to every channel separately. A blended figure hides the fact that your SEO might pay back in four months while paid social never does.

If a channel misses the payback line twice, stop it, however much volume it brings. Volume that loses money is only a faster route to the same place.

Model it before you launch

Put funded-trader counts, ARPU by segment, CAC by channel, churn and fixed costs into a spreadsheet, then stress it. What if CAC rises by 30%? If ARPU falls by 20%? If your main PSP leaves?

The model won't predict the future, but it will tell you which variables can sink you. Those are the ones to watch weekly. By the time a quarterly review catches a problem, the money has already gone.