Unit Economics

Overview

Unit economics measures profitability at the single-unit level — per customer, per transaction, or per product. If unit economics are negative, scaling makes losses worse, not better. Positive unit economics are the prerequisite for sustainable growth.

Framework

IRON LAW: If Unit Economics Are Negative, Growth = Faster Death

Scaling a business with negative unit economics means losing more money
faster. "We'll make it up in volume" only works if variable costs per unit
decrease with scale (economies of scale). If they don't, more volume = more losses.

Prove unit economics are positive BEFORE investing in growth.

Key Metrics by Business Model