Protocol Raw Financial Model Documentation¶
Purpose: Mental models and frameworks for understanding Protocol Raw's financial mechanics
Audience: Founder reference, investor discussions, board reporting
Version: 1.3
Last Updated: February 2026
Status: Aligned with Business Plan v2.3, Growth Strategy v2.3, and Metrics Reconciliation v1.0
How to Use This Document¶
This is not a spreadsheet. It's the thinking behind the spreadsheet.
Use this when: - Preparing for investor conversations - Explaining financial mechanics to advisors - Stress-testing assumptions - Making strategic decisions that have financial implications
The live models (spreadsheets, Metabase dashboards) contain the numbers. This document contains the logic.
Part 1: The Fundamental Equation¶
Business Value = Customers × LTV − CAC − Operating Costs
Everything else is detail. Every financial decision either: - Increases customers (acquisition) - Increases LTV (retention, ARPU) - Decreases CAC (efficiency, referrals) - Decreases operating costs (automation, scale)
If a decision doesn't improve one of these, question why you're doing it.
Part 2: The Two Cost Worlds¶
Protocol Raw has two fundamentally different cost structures. Confusing them leads to bad decisions.
Variable Costs (Per-Box)¶
These scale linearly with volume. They set the floor for pricing.
Phase A & B (Pre-Manufacturing Decision):
| Cost | Phase A | Phase B | Driver |
|---|---|---|---|
| COGS | £55 | £43 | Volume leverage with co-packer |
| CPD | £23 | £16 | Delivery density, courier rates |
| Total | £78 | £59 |
Phase C onwards depends on manufacturing decision made at Month 16-17:
| Cost | Phase C (Option A: Co-Pack) | Phase C (Option B: In-House) | Driver |
|---|---|---|---|
| COGS | £40-45 | £30-36 | Co-pack floor vs owned production |
| CPD | £9 | £9 | Same logistics model |
| Total | £49-54 | £39-45 |
Key insight: The manufacturing decision (Month 16-17, before Series A) determines Phase C economics. Option B requires £1.25-2.0M capex plus £400-600k/year fixed opex but delivers £9-10/box margin improvement.
Competitive precedent: Bella & Duke (£11-19M revenue) and Butternut Box (£10-20M revenue) both chose Option B at similar scale. B&D's gross margin improved from 31% to 44%.
Fixed Costs (Monthly)¶
These exist regardless of volume. They determine operating leverage.
Option A (Co-Packing):
| Cost | Phase A | Phase B | At Scale |
|---|---|---|---|
| Tooling (Supabase, Make, Customer.io, etc.) | £3,500 | £4,500 | £6,000 |
| Team | £0 | £8,000 | £12,000 |
| Other (legal, accounting, insurance) | £2,000 | £3,500 | £5,000 |
| Total | £5,500 | £16,000 | £23,000 |
Option B (In-House Manufacturing) adds at Phase C:
| Cost | Monthly | Annual | Notes |
|---|---|---|---|
| Facility lease + rates | £5-8k | £60-100k | 8-15k sq ft, Midlands/North |
| Utilities (cold + power) | £3-6k | £40-70k | Cold storage intensive |
| Production staff | £15-22k | £180-260k | 6-8 FTE |
| QA / food safety | £4-6k | £50-70k | 1-1.5 FTE |
| Maintenance & engineering | £3-5k | £40-60k | Fractional/contract |
| Insurance & compliance | £2-3k | £20-30k | Food manufacturing specific |
| Total Manufacturing Opex | £32-50k | £400-600k |
Key insight: Fixed costs determine how much profit you keep. They're the economics of scale.
The Protocol Raw advantage (Option A): Our fixed costs at 100k customers (~£125k/year) are 75% lower than traditional operators (~£510k/year). This shows up in operating margin (50-55% vs 35-40%) and justifies SaaS-like multiples.
Option B trade-off: Higher fixed costs (£400-600k/year manufacturing opex) are offset by £3.5-3.9M/year higher contribution at 30k customers. Net benefit: £2.9-3.5M/year.
Part 3: The P&L Waterfall¶
Revenue flows through five levels. Each level answers a different question.
Revenue (£109 inc VAT)
│
├── VAT (£18.17) → Goes to HMRC
│
▼
Gross Revenue (£90.83 ex-VAT)
│
├── COGS (£32-55) → Can we make money on each box?
│
▼
Gross Profit (£36-59)
│
├── CPD (£9-23) → Can we deliver profitably?
│
▼
Contribution (£13-50)
│
├── CAC (amortised) → Can we grow profitably?
│
▼
Post-CAC Margin
│
├── Fixed Costs (allocated) → Can we operate profitably?
│
▼
Operating Profit
What Each Margin Tells You¶
| Margin | Question It Answers | Target |
|---|---|---|
| Gross Margin | Is the product viable? | >40% at scale |
| Contribution Margin | Is the unit economics viable? | >45% at scale |
| Post-CAC Margin | Is growth sustainable? | Positive by Month 11 |
| Operating Margin | Is the business viable? | >45% at scale |
Part 4: Unit Economics (Per-Box)¶
The economics of a single box, which is the atomic unit of the business.
Phase A (Launch)¶
| Line | Amount | % of Revenue |
|---|---|---|
| Revenue (ex-VAT) | £90.83 | 100% |
| COGS | (£55.00) | 61% |
| Gross Profit | £35.83 | 39% |
| CPD | (£23.00) | 25% |
| Contribution | £12.83 | 14% |
Phase B (Month 18)¶
| Line | Amount | % of Revenue |
|---|---|---|
| Revenue (ex-VAT) | £90.83 | 100% |
| COGS | (£43.00) | 47% |
| Gross Profit | £47.83 | 53% |
| CPD | (£16.00) | 18% |
| Contribution | £31.83 | 35% |
Phase C (Month 36) - Option A: Continue Co-Packing¶
| Line | Amount | % of Revenue |
|---|---|---|
| Revenue (ex-VAT) | £90.83 | 100% |
| COGS | (£40-45) | 44-50% |
| Gross Profit | £46-51 | 50-56% |
| CPD | (£9.00) | 10% |
| Contribution | £37-42 | 41-46% |
Phase C (Month 36) - Option B: In-House Manufacturing¶
| Line | Amount | % of Revenue |
|---|---|---|
| Revenue (ex-VAT) | £90.83 | 100% |
| COGS | (£30-36) | 33-40% |
| Gross Profit | £55-61 | 60-67% |
| CPD | (£9.00) | 10% |
| Contribution | £46-52 | 50-57% |
Margin difference: Option B delivers £9-10/box higher contribution than Option A. At 30,000 customers (13 boxes/year), this equals £3.5-3.9M additional annual contribution—funding EU expansion or accelerating profitability.
Why Margins Improve¶
COGS (£55 → £43 → £30-45):
Phase A → B (co-packer optimisation): - Volume leverage with co-packer (500kg → 2,000kg batches) - Raw material purchasing power - Lab testing amortised across larger batches - These are negotiated step-downs, not projections
Phase B → C (manufacturing decision dependent):
Option A (Co-Packing): COGS floor at £40-45/box (£2.40-2.70/kg) - Volume step-downs with co-packer - Limited further improvement—co-packer margin is structural - Exit multiple: 8-10× ARR
Option B (In-House): COGS target £30-36/box (£1.80-2.20/kg) - Eliminates co-packer margin (20-25% of COGS) - Full control over production efficiency - Exit multiple: 10-12× ARR
The manufacturing decision is made at Month 16-17 based on Phase B trajectory data. Option B is only chosen if all Phase B thresholds are met (Box-2 retention ≥70%, City 2 replication working, CAC £70-90, referrals trending to 25%). This is a high-confidence, not mixed-signal, decision.
CPD (£23 → £16 → £9): - Delivery density (London concentration → route optimisation) - Courier volume discounts (£11.86 → £8.50 per parcel) - 3PL efficiency at scale - Packaging improvements
Part 5: Lifetime Value (LTV)¶
LTV is the total revenue a customer generates over their relationship with Protocol Raw.
The Calculation¶
The Components¶
Theoretical ARPU (Annual Revenue Per User): £1,180 - Revenue per box: £90.83 (ex-VAT) - Boxes per year: 13 (4-week cycle) - Theoretical ARPU = £90.83 × 13 = £1,180
This is the theoretical ARPU at perfect 4-week cadence. The Business Plan uses a conservative "Realised ARPU" target of £1,040, accounting for cadence drift (~11.5 boxes/year instead of 13). This model uses Theoretical ARPU for LTV calculation. The coincidence that LTV (£1,040) equals the Business Plan's Realised ARPU target (£1,040) is exactly that — a coincidence arising from different calculations. See Cadence Drift Sensitivity below for the impact of cadence drift on LTV.
Average Lifespan: 10.5 months - Blended monthly churn: 9.5% - Average lifespan = 1 ÷ 0.095 = 10.5 months
This is the blended cohort churn rate, which includes Box-1 attrition (30% of new customers) weighted into the average. It is deliberately conservative for investor modelling. The decomposition: 70% Box-2 retention + 7.4% post-Box-2 monthly churn produces a 9.5% blended rate and 10.5-month average lifespan. If the Growth Strategy's operational target of <4% post-Box-2 churn is achieved, actual blended churn would be ~5.4% and LTV would be ~£1,819 — but we model and fundraise on the conservative assumption.
Two-Layer Churn Model¶
Churn at Protocol Raw operates in two distinct layers. Conflating them leads to confusion in cross-document reading.
| Metric | Definition | Target | Used For |
|---|---|---|---|
| Box-2 Retention | % of new customers who order Box-2 | ≥70% | Product-market fit signal, cohort quality |
| Steady-State Churn | Monthly churn rate on subscribers who have received ≥2 boxes | <4% (operational target) | Operational dashboard, intervention triggers |
| Blended Churn | Effective monthly churn across all cohort months (including Box-1 attrition) | 6–8% (expected), 9.5% (conservative investor model) | LTV calculation, financial modelling |
The mathematical relationship:
Expected lifespan = 1 month + (Box-2 Retention × (1 ÷ Steady-State Churn))
Blended monthly churn = 1 ÷ Expected lifespan
Churn Sensitivity (Two-Layer)¶
| Box-2 Retention | Post-Box-2 Steady-State | Blended Churn | Avg Lifespan | LTV |
|---|---|---|---|---|
| 70% | 4.0% (Growth Strategy target) | 5.4% | 18.5 months | £1,819 |
| 70% | 5.5% (expected landing zone) | 7.3% | 13.7 months | £1,349 |
| 70% | 7.4% (conservative model) | 9.5% | 10.5 months | £1,035 |
| 65% | 5.5% | 7.8% | 12.8 months | £1,261 |
| 60% | 6.0% | 8.7% | 11.5 months | £1,131 |
Key insight: A 1.5-point improvement in blended churn (9.5% → 8.0%) adds £190 to LTV. Retention is the highest-leverage metric. The most likely landing zone is 5–6% post-Box-2 steady-state, producing 6.7–7.9% blended churn and £1,246–1,475 LTV — significantly above the conservative model.
Cadence Drift Sensitivity¶
The LTV calculation above uses Theoretical ARPU (£1,180), assuming perfect 4-week cadence. In practice, cadence drift (holidays, skipped weeks, delayed reorders) reduces realised boxes per year. This is modelled as a separate risk dimension from churn:
| Cadence | Boxes/Year | Realised ARPU | LTV (at 9.5% blended churn) |
|---|---|---|---|
| 4 weeks (perfect) | 13.0 | £1,180 | £1,040 |
| 4.5 weeks (slight drift) | 11.6 | £1,050 | £920 |
| 5 weeks (moderate drift) | 10.4 | £945 | £830 |
| 6 weeks (significant drift) | 8.7 | £790 | £690 |
The Financial Model does not stack cadence drift on top of conservative churn — that would double-count pessimism. Instead, each dimension is shown independently so investors can assess both risks.
Part 6: Customer Acquisition Cost (CAC)¶
CAC is what it costs to acquire one paying customer.
The Calculation¶
Blended CAC Targets¶
| Phase | Blended CAC | Paid CAC | Referral % |
|---|---|---|---|
| Phase A | £80-100 | £100-120 | 10-15% |
| Phase B | £70-85 | £90-110 | 20-25% |
| Phase C | £60-75 | £80-100 | 25-30% |
Key insight: Referrals are the CAC hedge. Every referral acquired at £10-20 (attribution cost) vs £100+ (paid) improves blended CAC. The 25% referral target by Month 18 is strategic, not aspirational.
Part 7: The LTV:CAC Ratio¶
The single most important metric for subscription businesses.
The Calculation¶
What It Means¶
| LTV:CAC | Interpretation |
|---|---|
| < 3:1 | Unprofitable—fix unit economics |
| 3:1 | Breakeven—survivable but not fundable |
| 5:1 | Good—typical SaaS benchmark |
| 10:1+ | Excellent—business funds its own growth |
| 13:1 | Protocol Raw target |
Key insight: At 13:1, every £80 spent on acquisition returns £1,040 in lifetime value. This means the business can fund its own growth from Month 11 onwards.
Payback Period¶
A 2.5-month payback means we recover acquisition cost before the third delivery. This is exceptional for a physical product subscription.
Part 8: The Manufacturing Decision (Financial Impact)¶
The most consequential financial decision is made at Month 16-17: continue co-packing (Option A) or build in-house manufacturing (Option B).
Decision Framework¶
Timing: Month 16-17 (before Series A raise)
Nature: Conviction bet based on Phase B trajectory, not proof of £30-40M ARR
Competitive precedent: - Bella & Duke: Built facility at ~£11-19M revenue (FY2021-22) - Butternut Box: Built Rudie's Kitchen at ~£10-20M revenue (2020-21)
Both made this decision at the revenue stage Protocol Raw will be at during Series A.
Decision inputs (all must be strong for Option B): - Box-2 retention ≥70% sustained at scale (3+ cohorts) - City 2 replication: 4-month playbook achieving 1,000+ customers - Co-packer COGS trajectory: Hitting step-downs (£2.80-3.10/kg by M12) - CAC efficiency: £70-90 blended, stable or improving - Referral rate: Trending to 25% - Path 2 intent: High conviction on EU expansion
Option B is only chosen if all thresholds are met. This is a high-confidence, not mixed-signal, decision.
Financial Comparison¶
| Metric | Option A (Co-Pack) | Option B (In-House) | Difference |
|---|---|---|---|
| Series A Raise | £10-15M | £12-17M | +£2-5M |
| Capex Required | £0 | £1.25-2.0M | Facility + equipment |
| Annual Fixed Opex | Included in COGS | £400-600k | Manufacturing operations |
| COGS/box (Phase C) | £40-45 | £30-36 | £10-15 lower |
| Contribution/box | £37-42 | £46-52 | £9-10 higher |
| Annual Contribution (30k) | £14.4-16.4M | £17.9-20.3M | +£3.5-3.9M |
| Exit Multiple | 8-10× ARR | 10-12× ARR | +2× premium |
| Exit Value (£70M ARR) | £560-700M | £700-840M | +£140M |
Payback Analysis¶
Option B Investment: - Capex: £1.25-2.0M - First-year opex: £400-600k - Total Year 1 investment: £1.65-2.6M
Annual Benefit: - Contribution uplift: £3.5-3.9M/year (at 30k customers) - Less: Additional fixed opex: (£400-600k/year) - Net annual benefit: £2.9-3.5M/year
Payback Period: 12-18 months
At 50k customers, annual contribution uplift reaches £5.8-6.5M. The investment pays back within one year.
Cost Basis¶
Option B estimates are based on UK industry benchmarks (Bella & Duke facility investment, industry capex data), adjusted for Protocol Raw's phased approach:
- Phase C facility sized for ~30k customers (8,000-15,000 sq ft)
- Single-shift operation with expansion optionality
- Expansion to Phase D funded separately (Series B)
Detailed facility planning, equipment specification, and site selection will be completed as part of the Month 16-17 manufacturing decision process, with specialist validation prior to Series A.
See Business Plan v2.0 Appendix: Option B Manufacturing Cost Methodology for full breakdown.
Why Competitors Made This Decision Early¶
Bella & Duke (FY2021-22): - Revenue at decision: ~£11-19M - Invested: ~£4M in manufacturing (larger facility than Protocol Raw Phase C requires) - Result: Gross margin improved from 31% to 44% (+13 points)
Butternut Box (2020-21): - Revenue at decision: ~£10-20M - Built: Rudie's Kitchen (200,000 sq ft integrated facility) - Result: Foundation for £280M+ raises and pan-European expansion
Both made the conviction bet at similar scale to Protocol Raw's Series A position.
The Irreversibility Principle¶
The manufacturing decision is not revisited annually. Once committed at Series A: - If Option B: Execute facility buildout, transition production over 18-24 months - If Option A: Negotiate long-term co-packer agreement with COGS floor protection
Revisiting the decision annually would burn management attention, undermine ops confidence, and signal strategic wobble to investors. Decide once. Fund properly. Execute ruthlessly.
Part 9: The Investor Narrative¶
How to talk about these numbers.
The One-Sentence Version¶
"We raise £1.25M to fund inventory and two hires. The business funds its own customer acquisition from Month 11. We end Phase B with more total assets than we raised."
The Three-Minute Version¶
"Our unit economics are exceptional—LTV:CAC of 13:1 with a 2.5-month payback. That means every £80 we spend on acquisition returns £1,040 in customer lifetime value.
The seed funds three things: customer acquisition in the early months before contribution covers it, inventory investment as we scale from 500 to 10,000 customers, and two key hires.
We hit operating breakeven at Month 11—that's when contribution exceeds acquisition cost plus fixed costs. Cash keeps declining until Month 16 because we're converting it to inventory faster than we generate it. That's not a loss; it's a productive asset.
By Month 18, we have 9,000+ customers, £800k monthly revenue, £865k cash, and £790k inventory. We raised £1.25M. We end with £1.65M in total assets. We're raising Series A from strength, not survival."
Anticipated Questions¶
"What if retention is lower than 70%?"
"If Box-2 drops below 60% for two consecutive cohorts, we pause acquisition and diagnose. We don't pour money into a leaky bucket. The model assumes 70%, but we're viable down to 65%. Below that, we fix retention before we scale."
"What if CAC rises?"
"We're modelling £80 blended. If it rises to £100, payback extends to 3 months—still acceptable. Above £120, we shift budget to retention and referrals. The 25% referral rate by Month 18 is our hedge against paid channel inflation."
"Why does cash decline even when you're profitable?"
"Working capital. Every new customer requires inventory pre-funded 4-6 weeks before they order. Contribution exceeds CAC by Month 11, but inventory investment exceeds contribution until Month 16. The seed bridges that gap. After Month 16, we generate free cash flow."
"What's your burn rate?"
"It's not a burn rate in the traditional sense. We're cash-flow negative through Month 15, but we're converting cash to inventory, not burning it on losses. The business is operationally profitable from Month 11. The cash is invested in productive assets, not consumed."
"Why is Option B capex lower than Bella & Duke's £4M?"
"B&D built a 34,000 sq ft facility for their current scale (£25M+ revenue, 134 employees, multi-SKU). Our Phase C facility is sized for ~30k customers—8,000-15,000 sq ft, single-shift, with expansion optionality. We build what we need for Phase C, then expand at Phase D if Path 2 is chosen. That's capital discipline, not under-investment."
"Your Growth Strategy says <4% churn but your model uses 9.5%. Which is it?"
"They measure different things. The 9.5% is the blended rate across a customer's entire lifetime, including the 30% who don't make it past their first box — that's the number we use for LTV and financial modelling. The <4% is the monthly churn rate on our active subscriber base after the initial trial period. Both are real; we fundraise on the conservative blended number. If our operational target holds, actual LTV will be significantly higher than modelled."
Part 10: Key Numbers to Know¶
Memorise these. They should be instant in any investor conversation.
Unit Economics¶
- Revenue per box: £90.83 (ex-VAT)
- Contribution per box: £13 → £32 → £37-52 (by phase, depends on manufacturing decision)
- Phase A: £13 (co-packed, early volumes)
- Phase B: £32 (co-packed, optimised)
- Phase C Option A: £37-42 (co-packed ceiling)
- Phase C Option B: £46-52 (in-house manufacturing)
- LTV: £1,040
- CAC: £80
- LTV:CAC: 13:1
- Payback: 2.5 months
Phase B Milestones¶
- Operating breakeven: Month 11 (~3,000 customers)
- Month 12-14: Technical Bandwidth Assessment
- Cash trough: Month 15 (~£780k)
- Manufacturing decision: Month 16-17
- Free cash flow: Month 16+
- End state: 9,140 customers, £865k cash, £790k inventory
Manufacturing Decision Numbers¶
- Option B capex: £1.25-2.0M
- Option B annual fixed opex: £400-600k
- Option B contribution uplift: £9-10/box
- Option B annual benefit (30k customers): £3.5-3.9M contribution, £2.9-3.5M net of opex
- Payback: 12-18 months
Sensitivity Thresholds¶
- Box-2 retention floor: 60% (below this, pause and diagnose)
- CAC ceiling: £120 (above this, shift to retention/referral)
- COGS target: £43 by Month 18 (contractual)
- Manufacturing decision gate: All Phase B thresholds must be met for Option B
Cost Structure at Scale (100k customers)¶
- Traditional operator: £510k/year
- Protocol Raw (Option A): £140k/year
- Protocol Raw (Option B): £540-740k/year (includes £400-600k facility opex)
- Option A advantage vs traditional: £370k/year (73% reduction)
- Option B advantage vs traditional: Margin gains offset higher fixed costs
Part 11: Strategic Implications¶
What these numbers mean for decisions.
Pricing¶
The model cannot survive a price cut. A 10% reduction destroys 71% of contribution. Premium positioning isn't vanity—it's survival. Every pricing discussion should start with "what does this do to contribution margin?"
Retention vs Acquisition¶
At 13:1 LTV:CAC, improving retention is more valuable than reducing CAC. A 5-point improvement in Box-2 retention (70% → 75%) adds more lifetime value than a £20 reduction in CAC. Prioritise accordingly.
Growth Rate¶
The constraint isn't demand—it's working capital. Faster growth requires more inventory investment, which accelerates cash consumption. The model assumes ~15% MoM customer growth. Faster is possible but requires earlier Series A or larger seed.
Hiring¶
Team expansion (Ops Lead M7, Marketing Lead M12) is budgeted at £190k. These hires are essential for execution but not for the model's validity. If cash gets tight, delay Marketing Lead before Ops Lead.
Manufacturing Decision¶
The Month 16-17 decision determines Phase C economics. Option B requires more capital (£12-17M vs £10-15M Series A) but delivers higher margins and exit multiples. The decision is made based on Phase B trajectory, not certainty—the same approach used by Bella & Duke and Butternut Box.
Inventory¶
6-week coverage is conservative. 5-week coverage is viable with reliable co-packer. Going below 5 weeks risks stockouts, which kill retention. Inventory discipline is a cash management tool, but stockouts are more expensive than excess stock.
Appendix A: Glossary¶
| Term | Definition |
|---|---|
| ARPU (Theoretical) | Annual Revenue Per User at perfect 4-week cadence (13 boxes/year). £1,180 ex-VAT. |
| ARPU (Realised) | Conservative annual revenue target accounting for cadence drift (~11.5 boxes/year). £1,040 ex-VAT. |
| Blended Churn | Effective monthly churn across entire customer lifetime, including Box-1 attrition. Used for LTV calculation. |
| Box-2 Retention | % of new customers who order a second box. Primary product-market fit signal. |
| CAC | Customer Acquisition Cost |
| COGS | Cost of Goods Sold (ingredients, production, packaging, lab testing) |
| Contribution | Revenue minus COGS minus CPD |
| CPD | Cost Per Delivery (courier, cold chain, 3PL) |
| FEFO | First Expired, First Out (inventory allocation method) |
| LTV | Lifetime Value |
| Steady-State Churn | Monthly churn rate on subscribers who have received ≥2 boxes. Excludes Box-1 attrition. Operational target: <4%. |
| MRR | Monthly Recurring Revenue |
| Working Capital | Cash tied up in inventory and receivables |
Appendix B: Model Update Log¶
| Date | Version | Change | Rationale |
|---|---|---|---|
| Jan 2025 | v1.0 | Initial documentation | Capture financial model logic |
| Jan 2026 | v1.1 | Manufacturing decision framework | Align with BP v1.7 and GS v2.2 |
| Jan 2026 | v1.2 | Manufacturing cost model correction | Align with BP v2.0 |
| Feb 2026 | v1.3 | Metrics reconciliation: churn decomposition, cadence drift, ARPU terminology | Align with Metrics Reconciliation v1.0, BP v2.3, GS v2.3 |
v1.3 Changes (February 2026)¶
Metrics Reconciliation (Ref: Metrics Reconciliation v1.0):
Applied edits from cross-document metrics audit resolving inconsistencies across Financial Model, Growth Strategy, and Business Plan.
Part 5 (LTV) — Major expansion: - Renamed "ARPU" to "Theoretical ARPU" to distinguish from Business Plan's "Realised ARPU" (£1,040) - Added blockquote explaining the £1,040 LTV / £1,040 Realised ARPU coincidence - Renamed "Monthly churn" to "Blended monthly churn" with blockquote explaining two-layer decomposition - Added Two-Layer Churn Model section with canonical definitions (Box-2 Retention, Steady-State Churn, Blended Churn) - Added Churn Sensitivity (Two-Layer) table showing LTV across Box-2 retention and steady-state churn combinations - Added Cadence Drift Sensitivity table showing LTV impact of cadence drift independent of churn - Replaced old single-dimension churn sensitivity table with richer two-layer version
Part 9 (Investor Narrative) — New FAQ: - Added anticipated question: "Your Growth Strategy says <4% churn but your model uses 9.5%. Which is it?" - Answer explains two-layer model and why both numbers are real
Appendix A (Glossary) — Updated terminology: - Split "ARPU" into "ARPU (Theoretical)" and "ARPU (Realised)" - Added "Blended Churn" and "Box-2 Retention" definitions
Decision applied: Option A confirmed — Financial Model keeps Theoretical ARPU (£1,180) for LTV calculation with cadence drift shown as separate sensitivity dimension. Does not stack cadence conservatism on top of churn conservatism.
Rationale: The Metrics Reconciliation v1.0 identified that £1,040 appeared across all three planning documents meaning three different things (LTV in the Financial Model, Realised ARPU in the Growth Strategy, conservative ARPU target in the Business Plan). An investor reading across documents would find contradictions. These edits make every metric's definition, scope, and cross-reference explicit.
v1.2 Changes (January 2026)¶
Manufacturing Cost Model Corrected: - Option B capex updated: £3-5M → £1.25-2.0M (right-sized for Phase C ~30k customers) - Option B annual fixed opex added: £400-600k/year (facility, utilities, 6-8 production staff, QA, maintenance, insurance) - Series A sizing for Option B updated: £15-20M → £12-17M - Payback period updated: 10-14 months → 12-18 months (reflects full investment including first-year opex) - Financial comparison table updated with corrected figures - Added "Cost Basis" section explaining methodology and referencing BP v2.0 appendix - Added anticipated investor question about capex vs B&D benchmark
Fixed Costs Section Enhanced: - Added Option B manufacturing opex breakdown table - Added Option B trade-off explanation (higher fixed costs offset by contribution gains) - Updated cost structure at scale to reflect Option B reality
Key Numbers Updated: - Added Manufacturing Decision Numbers subsection - Updated Phase B milestones to include Month 12-14 Technical Bandwidth Assessment - Updated cost structure at scale for Option B
Encoding Fixed: - Removed all corrupted characters from previous version
Rationale: v1.1 used Bella & Duke's £3-5M facility investment as the Option B benchmark, but B&D's 34,000 sq ft facility serves £25M+ revenue—an upper bound inappropriate for Protocol Raw's Phase C scale (~30k customers). Corrected figures reflect an 8,000-15,000 sq ft facility sized for Phase C with expansion optionality at Phase D. The addition of explicit annual fixed opex (£400-600k) provides complete cost picture for Option B evaluation. Payback remains attractive at 12-18 months even with full cost accounting.
This document should be reviewed quarterly and updated when assumptions change materially.