Unit Economics
Definition
The direct revenues and costs associated with a single unit of a business model—typically one customer, one transaction, or one product sold. Healthy unit economics (where lifetime value exceeds acquisition cost with adequate margin) are a prerequisite for sustainable growth at scale.
Related Terms
Related FAQ
What are realistic customer acquisition costs and how do you avoid overpromising growth?
CAC varies wildly by channel—£100 for self-serve SaaS to £50,000 for enterprise sales. Honest CAC forecasting avoids channel averaging and accounts for concentration risk.
Read full answer →What is unit economics honesty and why do founders obscure CAC/LTV ratios?
Founders often hide broken unit economics with misleading metrics. Honest presentation: transparent CAC by channel, LTV with conservative churn assumptions, and clear path to >3:1 LTV:CAC.
Read full answer →What are fintech-specific valuation considerations?
Fintech valuations emphasise regulatory risk, compliance costs, unit economics with high CAC, and the existence of network effects or switching costs.
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