Brokerage Unit Economics 101: Know Your Numbers Before You Scale

The four numbers that matter

Customer acquisition cost (CAC): everything you spend to get one funded trader — media, affiliates, IB rebates, bonuses, onboarding. Most brokers undercount this by forgetting bonuses and rebates, which are real acquisition spend wearing a marketing costume.

ARPU per month, payback period, and lifetime value (LTV): average monthly revenue per funded trader, how many months it takes to recover CAC, and total expected revenue over the trader's lifetime. The only ratio that matters at first: LTV to CAC. Below 3:1, you don't have a growth engine — you have a treadmill that speeds up as you run.

Where brokers actually make money

Revenue per trader comes from spreads and markups, commissions, overnight swap, and — for B-book flow — the trading P&L itself. The mix depends entirely on your model and your clients. Scalping-heavy books generate volume but thin margins per lot; position traders generate less volume but steadier, longer-lived revenue.

The uncomfortable truth: a small fraction of traders usually generate most of the revenue. Know your revenue concentration. If your top 50 traders are 60% of revenue, your 'diversified retail book' is a narrative, and your risk and retention strategy should reflect reality.

The costs everyone forgets

Beyond the obvious — platform licenses, liquidity, staff — the silent margin killers are PSP fees and failed deposits (a 5% deposit failure rate is a 5% tax on acquisition), bonus abuse and arbitrage, chargebacks, and the dealing desk cost of toxic flow you should have identified in week one.

Then there's churn. The average retail trader's active lifetime is measured in months, not years. Every month of retention you add is worth more than almost any acquisition optimization, because retained revenue has zero CAC attached.

Watch for the silent CAC inflator: reactivation spend. Win-back campaigns, dormant-account bonuses, and retargeting all cost money against traders who already converted once — track reactivation CAC separately from new-trader CAC, or your blended number will quietly lie to you about how efficient acquisition really is.

Payback discipline: the rule that saves brokerages

Set a maximum CAC payback period before you spend a dollar — twelve months is a common discipline for retail, shorter for prop. Then enforce it per channel, not blended. Blended CAC hides the truth: your SEO might pay back in four months while your paid social never pays back at all.

Kill channels that miss payback twice in a row, no matter how much volume they produce. Volume that loses money is just a faster way to fail. The brokers that survive downturns are the ones whose marketing dashboard has a red line nobody is allowed to cross.

Modeling before you launch

Build the spreadsheet before you build the brokerage. Model funded-trader count, ARPU by segment, CAC by channel, churn curves, and fixed costs — then stress-test it: what happens if CAC rises 30%? If ARPU drops 20%? If your best PSP leaves?

The model won't be right, but it will be honest about which variables kill you. Those are the variables your first year of operations should be instrumented to measure daily. Brokers that measure these numbers weekly outperform brokers that discover them quarterly — by the time the quarterly review happens, the money is already gone.