Unit economics

Revenue and costs per defined customer, order, location or other unit, measured over a stated time horizon. Specify the costs included: direct-cost contribution is one useful measure, but it is not the same as net profit.

Also called Unit-level economics

Unit economics in round numbers

Hypothetical single order, in US dollars: revenue of 100 minus 50 of materials, direct labor and fulfillment costs leaves a contribution of 50. This excludes customer acquisition costs, fixed overhead, interest and tax. It is contribution per order, not net profit. A customer-based analysis may also need acquisition, retention and lifetime assumptions.

Contribution margin · Fully loaded costs · Customer acquisition cost · Asset turnover · Four-wall EBITDA · Operations centralization · Facility rationalization · The Comfort Metric · All of the glossary