Unit Economics

The revenues and costs associated with a single unit, customer or transaction.

Unit economics break a business down to its smallest repeatable unit to show whether each customer is profitable. Key components include CAC, LTV, contribution margin and payback period. Sound unit economics prove a model can scale profitably rather than just grow.

Examples

A startup shows each customer costs £100 to acquire and generates £400 profit. — Investors ask for unit economics before a Series A.

How it relates to The Startup Foundry

The Foundry helps founders evidence solid unit economics, a key part of demonstrating scalability to investors.

Related terms

Back to the glossary