Unit Economics
Definition
Unit Economics: Unit economics refers to the direct revenues and costs associated with a single unit of a business (a customer, product, or transaction). Positive unit economics means each unit generates profit, which is essential for sustainable growth at scale.
Example Usage
“Our unit economics are strong: $500 CAC with $2,000 LTV means we're profitable on each customer.”
Common Misconceptions
Related Terms
Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including marketing, sales, and onboarding expenses. CAC is calculated...
Customer Lifetime Value
Customer Lifetime Value (LTV) is the total revenue a business can expect from a single customer account over the entire relationship. LTV is calculate...
Gross Margin
Gross margin is revenue minus the cost of goods sold (COGS), expressed as a percentage of revenue. For SaaS companies, COGS typically includes hosting...
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