Definition
Unit economics measure profitability per customer or per unit of usage.
Why it matters
Unit economics determine whether growth is sustainable and guide pricing and acquisition decisions.
Pricing implications
If unit economics are weak, adjust pricing, reduce costs, or target different segments.
Measurement tips
Use cohort-based churn and contribution margin for accuracy.
Checklist
- Define the unit (customer, seat, request).
- Calculate gross and contribution margins.
- Compare LTV to CAC by segment.
- Track payback period trends.
- Update models quarterly.
- Avoid mixing one-time revenue into LTV.
- Use cohort data to validate assumptions.
- Share unit economics with product and finance.