Metrics & Performance
Unit Economics
The direct revenues and costs associated with a single customer or unit — used to assess whether a business can be profitable at scale.
Unit economics examines the revenue and cost associated with a single 'unit' of a business — typically one customer, one transaction, or one subscription. For SaaS: the core unit economic analysis is CAC (Customer Acquisition Cost) vs. LTV (Lifetime Value). If you spend $1,000 to acquire a customer who generates $3,000 in LTV, your unit economics are positive. Healthy unit economics (LTV/CAC > 3:1) indicate that scaling the business will create value. Poor unit economics (LTV < CAC) mean you're destroying value with each customer acquired — a fundamental problem that cannot be solved by growth alone. VCs scrutinize unit economics carefully because companies that scale with negative unit economics amplify losses rather than profits. Gross margin is a critical input — high gross margin businesses can have strong unit economics even with significant acquisition costs.