Definition
Unit economics asks whether one unit of the business — a customer, an order, a store — makes money after the costs that belong to that unit. If the unit loses money, growth makes the hole bigger. If the unit wins, growth is a volume problem, not a model problem.
In the room
How the word shows up in a real conversation.
A meal-kit order sells for ₹499. Food, packing, and delivery cost ₹410. Contribution is ₹89 before ads. If CAC is ₹200 and the customer orders twice, the unit still loses. That is the unit-economics conversation.
Formula
Contribution per unit = revenue per unit − variable cost per unit
Common mistake
Averaging blended profit across products and calling it unit economics. One hero SKU can hide three that lose money.
See also
Customer Acquisition Cost (CAC)
What you spend in sales and marketing to win one new paying customer.
Read definition →
Customer lifetime value (CLV)
Predicted revenue a customer will generate over their entire relationship.
Read definition →
Gross Margin
Percentage of revenue remaining after deducting the cost of goods sold.
Read definition →
Payback period
Time required for an investment to recover its initial cost through cash flows.
Read definition →
From the store
Research more
Open the word in an AI tool with a ready prompt. We do not send your data.
Get one word every week
A 3-minute read: 1 word, 1 founder lesson, 1 tool.