Here, we will explain below what Unit Economics stands for. You will also find a brief manual on how to use our economics calculator.
A basic unit economics definition is here: it’s an approach meant to evaluate and calculate the costs and profits of a certain business model in relation to the particular unit. By units, we mean any quantifiable item that is valuable for the business. It may be, for instance, a booked hostel apartment, taxi ride, or one client engagement. Unit-level economics answers a simple yet essential question — do we gain revenue from a particular user (unit) or not?
The data generated by unit economics analysis may become an integral component of your brand's short- and long-term financial planning:
The unit model requires a clear understanding of what exactly we need to calculate — the contribution margin generated by the sale of a service or product. Therefore, we have to deduct from the common revenue all the costs related to the economy unit we analyze. Let’s take software integration as an economics calculation example. In this case, a team of IT specialists is involved. Therefore, the cost of each activity related to the integration process is included in the overall price. If you sell smartphones via the online store, the expenses will consist of the gadgets’ price, delivery, payment system fees, and other associated costs.
With our calculator, you can easily do it.
Explore the science of Unit Economics and always benchmark your business using these practices. Be sure, it will bring you growth and income!