Unit Economics

Definitions

1. The revenue and costs associated with a single unit (customer, transaction, or subscription). Key metrics: LTV (Customer Lifetime Value), CAC (Customer Acquisition Cost), and the LTV:CAC ratio (healthy is 3:1+). Positive unit economics means each new customer is profitable — negative means you lose money on every sale.

   In plain English: Whether you make or lose money on each individual customer after accounting for the cost of getting and serving them.

   Example: "Our LTV is $2,400 and CAC is $800 — 3:1 ratio with 8-month payback. Unit economics are healthy enough to scale."

Related Terms

• ARR
• Churn Rate
• Total Addressable Market
• Burn Multiple
• Net Dollar Retention
• Pricing Page
• Internal Rate of Return
• Magic Number Startup
• Monthly Recurring Revenue
• Basis Point
• CAC Payback
• Quick Ratio
• Revenue Multiple
• Rule of 40
• SaaS Metric