Unit economics
Unit economics - calculating profit from one client or order: does the business converge if it is scaled up? It is considered before pouring the budget.
Unit economics - calculation of profit from one “unit”: client, order or subscription. The main question she answers is: will a business make or lose money if it scales what it has now.
You need to calculate the unit economy before pouring the budget. A common picture: advertising “works”, leads are coming in, turnover is growing - but there is no profit, because attracting a client costs more than it brings. Scaling an unprofitable model simply makes you lose money faster.
The basic calculation framework is LTV versus CAC. If a client brings in less over the entire period than it cost to bring him in, the model does not converge, and no amount of creative optimization will save it. You need to fix either the economy (price, average order value, repeat sales) or the acquisition channel. LTV/CAC benchmarks by niche are in separate article.
Frequently asked questions about Unit economics
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