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Entrepreneurship & Startups vocabulary · Unit Economics & Metrics

Unit economics

Meaning in entrepreneurship & startups, with examples

nounCommon term

In entrepreneurship & startups, unit economics means: The revenue and costs connected to one unit of the business, such as one customer or one order, which show whether each sale makes or loses money.

In Turkish: birim ekonomisi

How it is used

Investors ask whether the unit economics work before they fund growth. Typical numbers are CAC, LTV, gross margin per order and payback period. Founders say the unit economics work, don't work yet or are improving.

Example sentences

  1. Each delivery loses us two dollars, so the unit economics don't work yet.

  2. Fix the unit economics first; growing a loss-making model only makes the losses bigger.

Common collocations

  • strong unit economics
  • the unit economics work
  • improve unit economics
  • positive unit economics
  • customer acquisition costThe average amount a company spends on sales and marketing to win one new paying customer, usually shortened to CAC.
  • lifetime valueThe total revenue or profit a company expects to earn from one customer during the whole time that customer keeps buying, often shortened to LTV.
  • gross marginThe share of revenue left after paying the direct costs of making or delivering a product, before other costs such as marketing, rent and office expenses.
  • break evenTo reach the point where revenue equals costs, so the company is neither losing money nor making a profit.
  • scaleTo grow a business quickly to many more customers, markets or sales without costs and effort growing at the same speed.

More terms: Unit Economics & Metrics

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