Whether each sale makes money.
WHAT UNIT ECONOMICS MEANS
The profit or loss on a single sale or customer.
WHY IT MATTERS
If each sale loses money, more sales make things worse.
WHAT TO CALCULATE
Revenue from one customer Direct cost of serving them What it cost to acquire them How long they stay
WHAT ACQUISITION COST IS
Total spending on marketing and selling, divided by customers won.
WHAT CUSTOMER VALUE IS
What they pay over the whole relationship, minus the cost of serving them.
WHAT THE KEY COMPARISON IS
Value against acquisition cost.
WHAT A HEALTHY RATIO LOOKS LIKE
Value substantially exceeding acquisition cost.
WHAT IT MEANS IF IT DOES NOT
The model does not work, regardless of growth.
WHAT ELSE TO CALCULATE
How long before a customer repays their acquisition cost.
WHY THAT PERIOD MATTERS
It determines how much cash growth consumes.
WHAT A LONG PAYBACK MEANS
Growing faster requires more capital.
WHAT TO DO ABOUT POOR UNIT ECONOMICS
Raise prices Reduce delivery cost Reduce acquisition cost Improve retention
WHY RETENTION HAS THE LARGEST EFFECT
It multiplies value without increasing acquisition cost.
WHAT TO MEASURE REGULARLY
All four inputs.
WHAT TO AVOID
Growing while each sale loses money.
WHY
It accelerates failure and conceals it behind rising revenue.
