Finance Library
BusinessIntermediate 4 min read
Unit Economics
The single sale, broken into its parts — does this business work?
Revenue per customer (LTV)+$120
Cost to serve (COGS)−$30
Cost to acquire (CAC)−$40
= Profit per customer+$50
What it is
Unit economics zooms in on a single unit — usually one customer or one product — and asks: does this make money once you include everything it takes to get and keep that customer?
Two key numbers
Customer Acquisition Cost (CAC) is what you spend to land a customer. Lifetime Value (LTV) is the total profit they generate over time. A healthy business has LTV well above CAC.
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