Know Your Numbers: The Metrics Sharks Grill Founders On

Nothing loses a Shark faster than a founder who doesn't know their numbers. Hesitating on sales or guessing at margins tells an investor one of two things: the founder doesn't understand the business, or the numbers aren't good. Either way, the pitch is in trouble. The upside is that the metrics Sharks care about are learnable, and once you know them, they make you a better operator whether or not you ever pitch an investor.

Below are the numbers that come up most often, how to calculate them, and what investors read into them. All figures in the examples are hypothetical.

1. Sales (revenue)

Revenue is total money from sales before expenses. Sharks usually want three views:

• Lifetime sales: everything since launch.
• Trailing 12 months (TTM): the most recent full year.
• Year to date (YTD): this calendar year so far, which shows momentum.

Also be ready to break sales down by channel (your website, Amazon, wholesale, retail) and to explain any seasonality. A holiday product with 70% of sales in November and December has very different cash needs than a year-round staple.

2. Landed cost and cost of goods sold

Landed cost is the total cost to get one finished unit into your warehouse: manufacturing, packaging, freight, duties and inbound handling. Cost of goods sold (COGS) is the total of those costs for the units you sold in a period.

Example: A product costs $3.20 to manufacture, $0.40 for packaging, $0.55 in freight and $0.35 in duties. Landed cost = $4.50.

3. Gross margin

Gross margin shows how much of each sale is left after the cost of the product itself:

Gross margin = (Price − Landed cost) ÷ Price

Direct-to-consumer margins look highest, but they ignore shipping, payment fees and advertising, which the founder pays. Wholesale margins are lower but the retailer handles the end customer. Many consumer product investors look for room to sell at wholesale and still make money, because retail is often where scale comes from. A common rule of thumb in consumer products is that retail price should be several times landed cost, but healthy targets vary widely by category.

4. Contribution margin

Contribution margin goes one step further and subtracts variable selling costs like shipping, payment processing, marketplace fees and ad spend per order.

Example, direct-to-consumer: $24.99 price − $4.50 landed cost − $6.00 shipping − $0.95 payment fees − $7.00 ad cost per order = $6.54 contribution, or about 26%. That's the cash each order contributes toward overhead and profit. Many founders who quote an 82% gross margin are surprised by this number.

5. Net profit and EBITDA

Net profit is what's left after all expenses, including salaries, rent, software and interest. Some investors also ask about EBITDA (earnings before interest, taxes, depreciation and amortization), a rough measure of operating profit. If you aren't profitable, know your monthly loss and when you expect to break even.

6. Customer acquisition cost (CAC)

CAC = Marketing and sales spend ÷ New customers acquired

Example: $15,000 in ads last month brought in 600 new customers. CAC = $25. Know CAC by channel, because averages hide problems. Paid social might cost $35 per customer while referrals cost $8.

7. Lifetime value (LTV) and the LTV:CAC ratio

Lifetime value estimates the gross profit a customer generates over the whole relationship:

LTV = Average order gross profit × Number of orders per customer

Example: Average order gross profit is $18, and customers order 2.5 times on average. LTV = $45. With a $25 CAC, the LTV:CAC ratio is 1.8. Many investors like to see LTV comfortably above CAC, often citing 3:1 as a healthy benchmark, though it depends on how quickly you earn back the acquisition cost.

Repeat purchase rate

The share of customers who buy again within a set period. Consumables like food, beverages and personal care can have strong repeat rates, which is one reason investors often like them.

8. Inventory and cash conversion

Product businesses tie up cash in inventory. Sharks ask how much inventory you have, how fast it sells and how you'll finance larger orders.

• Inventory turnover: COGS for the year ÷ average inventory value. If annual COGS is $200,000 and average inventory is $50,000, turnover is 4, meaning stock sells through about every three months.
• Minimum order quantities: how many units your manufacturer requires per run.
• Lead times: how long from order to delivery.
• Cash cycle: how long between paying the manufacturer and getting paid by customers or retailers. Retail payment terms can stretch this considerably.

Rapid growth can actually create a cash crunch: a big retail order requires paying for inventory months before the retailer pays you. That's why some Sharks offer lines of credit or inventory financing. See the deal terms glossary.

9. Burn rate and runway

Burn rate is how much cash you lose each month. Runway is cash on hand divided by burn. With $90,000 in the bank and a $15,000 monthly burn, runway is six months. A short runway weakens your negotiating position because investors know you need money soon.

10. Valuation-related numbers

Know your implied valuation (investment ÷ equity %) and how it compares to sales and profit. If you ask $250,000 for 10% with $500,000 in annual sales, that's a $2.5 million valuation, or 5 times sales. Read how valuation works on Shark Tank and try the valuation calculator.

How numbers play out in different businesses

Different business models live or die by different metrics. A few examples from our database to study:

• Food and shipping costs: Wicked Good Cupcakes (Season 4 deal with Kevin O'Leary) sells cupcakes in mason jars designed for nationwide shipping, where packaging and freight are a big part of landed cost. Bantam Bagels (Season 6 deal with Lori Greiner) makes stuffed mini bagel balls, a perishable product where production capacity matters.
• Bulky products: Tower Paddle Boards (Season 3 deal with Mark Cuban) sells inflatable paddle boards direct to consumers online, where product cost and shipping drive margin.
• Consumables and repeat purchase: Dude Wipes (Season 7 deal with Mark Cuban) and BeatBox Beverages (Season 6 deal with Mark Cuban) are products customers can buy again and again.
• Seasonality and licensing: Gameday Couture (Season 6 deal with Mark Cuban) designs licensed sports apparel, a category tied to sports seasons and licensing agreements.
• Beauty accessories: The Sleep Styler (Season 8 deal with Lori Greiner), heat-free rollers, competes in a category where retail placement and price point matter.

How to keep your numbers ready

The easiest way to know your numbers on demand is to review them on a schedule. Set up simple bookkeeping from the start, reconcile accounts monthly, and keep a one-page dashboard you update every month with the metrics above. When numbers are part of your routine, answering an investor's question becomes recall rather than calculation.

Your one-page numbers sheet

Fill this out, then practice answering the questions Sharks always ask using only the numbers on the sheet. If a number is weak, prepare a short, honest explanation and a plan. For more on this, see common pitch mistakes.