Unit economics
Unit economics are the revenues and costs of a business measured per single unit, usually one customer, to show whether the model works before scale.
The purpose is to test the model at its smallest repeatable size. If one customer loses money, more customers lose more money, and growth makes the problem larger rather than smaller.
For subscription businesses the core pair is lifetime value against acquisition cost, read alongside payback period.
At the single-customer scale this is arithmetic a founder can own. Tracking it continuously — cohort by cohort, plan against actuals — is the job FP&A tooling exists for, and it becomes worth buying only once someone owns finance as a job.
Common questions
How do you calculate unit economics?
Pick the unit, usually one customer, then total what that unit brings in and what it costs. For SaaS that means lifetime value (revenue per customer times gross margin times average lifetime) against customer acquisition cost. If value exceeds cost with room to spare, the unit works.
What are good unit economics?
The common yardsticks are a lifetime value at least three times acquisition cost, and acquisition cost paid back inside 12 months. A ratio below 1:1 means every new customer loses money, and payback beyond a year strains cash even when the ratio itself looks healthy.
Why do unit economics matter for startups?
Because growth multiplies whatever the unit does. If one customer generates profit, scale compounds it; if one customer loses money, scale accelerates the loss. Checking the economics at the single-customer level shows whether the model works before you spend to grow it.
Keep this number live
Plainhub computes unit economics from money you record in plain words, so it is current when you need it rather than the night before a board meeting.
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