The revenue and costs of one unit of your business, such as one order or one customer, worked out to see whether each unit makes or loses money.
Formula
Per order: price − product cost − shipping and fees − ad cost per order
Example
One online order for Meera brings ₹2,000. The clothes cost ₹600, shipping and packaging ₹100, payment fees ₹40 and the ad cost per order ₹500. ₹760 is left per order towards fixed costs.
How you'll hear it
“Before we scale, let's check the unit economics: are we making money on each order after ads?”
Don't confuse it with
- Contribution margin: one line within unit economics, before ad cost.
- LTV: CAC ratio: unit economics at the level of a customer rather than an order.
Related terms
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