Unit Economics

Overview

Unit economics answer one question: does the business make money per customer? Everything else in business — marketing spend, pricing, growth targets — should be informed by this answer. For solopreneurs, unit economics are especially critical because there's no VC money to burn through while you figure it out. This playbook teaches you how to calculate, interpret, and improve your numbers.

The Three Core Metrics

Every unit economics conversation starts with these three numbers. Calculate all of them before making any marketing or pricing decisions.

1. CAC — Customer Acquisition Cost

What it is: The total amount you spend to acquire one new customer.

Formula:

CAC = Total Marketing & Sales Spend / Number of New Customers Acquired