Unit economics
Unit economics answers the only question that decides whether growth is worth having: does one more customer, job, order or seat add profit, or does it add cost dressed as revenue. Most owners know their total revenue and their total profit and nothing in between. We break the business into its units, cost each one honestly, and show you which to sell more of, which to reprice and which to stop.
What you leave with
You know the contribution of one unit of your business, the cost to acquire it, how long it takes to pay back and whether scaling it makes money.
Who it is for
- Founders of technology and subscription companies preparing to raise or to scale spend
- Service and trades companies that grow revenue every year without growing profit
- E-commerce and product businesses where fees, freight and returns blur the margin
What we deliver
- A unit definition that fits your model, whether that is a customer, a job, an order, a seat or a location
- Contribution margin per unit, after direct cost, selling cost and cost to serve
- Customer acquisition cost by channel and payback period
- Lifetime value with the assumptions written down and tested
- A break-even view: how many units cover overhead at the current margin
- A one-page unit economics summary suitable for an investor or lender
How it runs
01Define the unit
We choose the unit that drives decisions in your business and agree exactly what counts as revenue and cost for it.
02Cost it fully
We pull actual data for direct cost, acquisition cost and service cost per unit, by channel and by segment.
03Test it
We check the model against the last four quarters so that it predicts what actually happened.
04Decide
We show which segments and channels to grow, hold or cut, and what each pricing or cost change does to the unit.
Engagement and fees
A Workshop of two to four weeks at $30K to $80K. For early-stage companies, a Startup Advisory session at $349 for 60 minutes is the place to start and often answers the first version of the question. Every engagement is scoped after a call and confirmed in writing. See consultations and fees.
What a unit is and why it matters
For a plumbing company the unit is a job. For a software company it is a customer or a seat. For an online store it is an order. For a clinic it is a patient visit. For a franchise it is a location. The right unit is the one the business repeats to grow, and the one your costs attach to most directly.
Once the unit is costed, growth stops being abstract. If a job contributes $400 after labour, materials, the share of the truck and the cost of winning it, and overhead is $40,000 a month, you need a hundred jobs a month to break even and every job past that is profit. If a job contributes $40, growth is a treadmill.
Acquisition cost, lifetime value and payback
Customer acquisition cost is everything you spend to win a customer, by channel, divided by the customers that channel produced. It includes advertising, the salesperson's time and the free estimate. Lifetime value is the contribution a customer produces over the time they stay. Payback is how many months of contribution it takes to recover the acquisition cost.
These three numbers together tell you how much you can afford to spend to grow and how long your cash will be tied up doing it. A company with a long payback and a short runway can be right about everything else and still fail. We show the numbers per channel, because the average hides the channel that is quietly losing money.
Common mistakes we fix
The most common error is leaving out cost. Owner time, warranty work, returns, card fees, freight, software seats and the cost of the free quote all belong to the unit. The second is using averages across segments that behave differently. Residential and commercial customers, new and repeat, organic and paid, each need their own line.
The third is optimism in lifetime value. Churn is measured from your own data, not from an industry article, and the forecast horizon is capped at something you can defend. A unit economics page built this way stands up in front of a lender or an investor, and more usefully, in front of you.
- Sales and cost data by customer or job for the last 24 months
- Marketing and sales spend by channel
- Churn, repeat rate or job frequency, from your own records
Industries where we run this most
Questions about this service
Is unit economics only for startups?
No. The language comes from technology companies, but a landscaping company, a dental clinic or a distributor needs the same answer: what does one more unit of the business earn. The method is identical. Only the unit changes.
How is this different from pricing and margin work?
Pricing and margin work looks at what you sell. Unit economics looks at who you sell it to and what it costs to win and keep them. The two overlap and often run together. If your margins are fine but growth does not add profit, the problem is in the unit, not the price list.
What if we do not track cost by customer or job?
We build a reasonable version from what exists, such as payroll by role, timesheets, marketing spend and invoice data, and we set up the tracking so the next version is better. A rough unit model built from real data beats a precise one built from guesses.
Can you present this to investors with us?
Yes. The one-page summary is written to answer the questions investors and lenders ask, and we attend the meeting with you to walk through the assumptions. The point is that every number on the page traces back to your own records.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.