What is unit economics?

Unit economics is a method of analyzing a business's financial metrics at the level of a single product or service unit. It helps to understand how much a company earns or loses on each sale, considering the revenues and costs associated with acquiring and servicing one customer or selling one product.

Key metrics of unit economics:

• CAC (Customer Acquisition Cost) — the cost of acquiring one customer.
• LTV (Lifetime Value) — the total profit from a customer over the entire period of cooperation.
• Contribution Margin — the difference between the revenue from a unit and the variable costs associated with it.

Example: if acquiring a customer costs 1000 rubles, and over the course of cooperation, they generate 3000 rubles, then the unit economics is positive, and the business is scalable.

Unit economics is important for assessing the sustainability and profitability of a product, especially in the early stages of development.