Unit Economics
The direct revenues and costs associated with a single unit of a business, typically a single customer or user.
Keywords:
unit economics, ltv, cac, payback period
Contents
Deep Dive
Metaphysical Synthesis & Analysis
The Synthesis
Unit economics measure the profit/loss of a single customer or transaction. The core metrics are LTV (Lifetime Value) and CAC (Customer Acquisition Cost). David Skok's research shows that LTV:CAC ratio should be >3:1, and CAC payback should be <12 months. For PMs, unit economics determine whether a business model is sustainable. Negative unit economics can't be fixed with scale—they get worse.
Metaphysical Foundation
Unit economics are the fundamental physics of a business. They determine whether the business can exist at scale.
Evolutionary Path
From simple margin analysis to sophisticated cohort-based LTV models, unit economics has become more predictive and granular.
Strategic Interplays
Unit economics are determined by Monetization, Retention, and Acquisition costs. They validate business-model viability.
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