Unit Economics
In one sentenceWhether you make money on a single customer, order or unit, before overhead. If one unit loses money, more sales make it worse.
What it means
Unit economics compares what one customer brings in (LTV, Gross Margin) with what it costs to win and serve them (CAC, COGS). Strong unit economics are the foundation for scaling with confidence.
How to use it
- Check LTV ÷ CAC. Around 3 or more is a common healthy target.
- Check payback period: how many months until a customer's gross profit covers what it cost to acquire them.
FormulaLTV:CAC ratio = customer lifetime value ÷ customer acquisition cost
CAC payback (months) = CAC ÷ monthly gross profit per customer
CAC payback (months) = CAC ÷ monthly gross profit per customer
Related terms
LTV CAC Gross Margin Break-Even Point
Still fuzzy? Ask the evyAI agent to explain Unit Economics with examples for your business.
Ask evyAI