Unit Economics Sheet

Pick the unit your business really runs on, work out what one of them earns after every variable cost and after what it took to win it, and see which single lever (price, cost to serve, retention or acquisition cost) moves the result most.

Customer lifetime value modeling rests on strong research (Gupta, Lehmann & Stuart, 2004; Gupta et al., 2006). Contribution and break-even are standard finance teaching. The LTV:CAC and payback thresholds used here are rules of thumb from practice, without a peer-reviewed source.

Use it when:

• You are about to spend more on growth (ads, sales staff, a new location) and want to know if each new unit pays for itself.
• Revenue grows but profit does not, and you want to see whether the problem is price, cost to serve or acquisition.
• You are setting a price or a discount policy and need to know how much room you have.

Skip it when:

• You want the whole business on one page, not one unit: use 5.4 3-Statement Snapshot.
• You need to set the price itself: use 6.22 Pricing Your Offer, then come back to check the margin here.

Unit economics answers the question aggregate accounts hide: does one more unit of this business create or destroy value? A company can grow revenue every quarter while every new customer loses money; the income statement shows the growth, and only the unit view shows the loss. The research foundation is customer valuation: a customer is worth the margin they generate over their lifetime, discounted, net of what it cost to win them, and firms can be valued from these parts (Gupta, Lehmann & Stuart, 2004). That gives the two central figures, lifetime value and acquisition cost, and one comparison: if lifetime value does not clearly exceed acquisition cost, growth multiplies a problem.

Two subtleties do most of the work. Choose the unit honestly in Step 1: the order flatters when customers buy once and leave. And profit on paper is not cash: costs come first and margin later, which is why growth eats cash and why 5.4 sits next to this sheet.

The unit is the thing you sell and win again and again: one customer per year, one project, one order, one subscription, one table cover. Pick the one that matches how customers actually buy.

Strong answer: "One household customer per year, because customers book four to six visits a year and we win them once." Not: "One visit," when the cost of winning the customer is spread over many visits.

Our unit:

Why this unit, and not a smaller one:

Period one unit covers (one order, one month, one year):

Illustrative example: the business and all numbers are made up.

A window-cleaning firm in Uppsala serves households on a regular schedule.

Step 1: the unit is one household customer per year, about six visits.

Step 2: realized price 600 SEK per visit after the first-visit discount. Labor 300, travel and supplies 50, booking and card fees 20. Contribution 230 SEK per visit, 1,380 SEK per year.

Step 3: referrals cost 300 SEK per new customer, flyers 900 and the booking platform 600, and each brings about a third of new customers. Blended CAC is 600 SEK. Payback comes after about three visits. Customers stay about three years by the firm's own records, so lifetime value is about 4,100 SEK and LTV:CAC about 7 to 1.

Step 4: fixed costs are 60,000 SEK a month, so break-even is about 260 visits a month. The firm does 240.

Step 5: the health check passes on payback and LTV:CAC, but the firm is below break-even. Price is the strongest lever on paper, but the owner chooses route density first: travel falls from 50 to 30 SEK per visit, contribution rises to 250 SEK, and break-even drops to 240 visits. A price review follows in spring.