Unit Economics

The revenue and costs directly associated with a single unit of product or one customer, used to assess whether the fundamental building block of a business is profitable before scaling.

A business with poor unit economics loses money on every transaction and cannot be saved by growth alone. Founders must confirm positive unit economics before investing in scaling, or they risk burning capital faster as they grow.

A founder calculates that each online course sold generates £197 in revenue, costs £12 in platform fees and payment processing, and took £35 of marketing spend to acquire. Her unit economics show £150 contribution per sale, confirming the model is worth scaling.