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Analysis of economic metrics per sold unit to evaluate a product's profitability and scalability.
Unit economics analyze the financial fundamentals of a product on a per-unit basis. They focus on costs, price, contribution margin, customer acquisition cost (CAC) and customer lifetime value (LTV). Their purpose is to assess scalability and profitability and to guide pricing, growth and investment prioritization.
Average cost to acquire a paying customer.
Expected total revenue or contribution margin from a customer over the relationship.
Revenue minus variable costs per sold unit.
A SaaS company reduces CAC through channel optimization and increases LTV via upgrades, turning unit economics positive.
An online retailer computes contribution margin per order including returns and shipping costs to decide on promotions.
A marketplace evaluates different fee models to ensure sustainable margins per transaction.
Define the relevant unit and segmentation
Collect and validate cost and revenue data
Build model, run scenarios and establish governance for regular monitoring