itsual Unit Economics
Overview
Unit economics answer whether each incremental customer, order, or unit creates value after direct costs and acquisition spend. They are the bridge between growth and profitability.
When to Use
- SaaS, marketplace, and consumer growth decisions
- Pricing and packaging changes
- Channel and CAC efficiency reviews
- New product or segment viability
Core Metrics
- Contribution margin per unit
- CAC (customer acquisition cost)
- LTV (lifetime value) and LTV:CAC
- Payback period
- Cohort retention and expansion effects
Principles
- Define the “unit” clearly (customer, account, order, ride)
- Fully load costs that scale with the unit
- Cohort-based LTV beats blended averages when retention varies
- Good unit economics can still fail with bad overhead or capital structure
Verification
- Unit definition and cost allocation are explicit
- CAC and LTV methodology is consistent over time
- Decisions reference payback and contribution, not vanity growth