Unit Economics Calculator

Here, we explain what unit economics stands for. You will also find a brief manual on how to use our economics calculator.

What is unit economics?

Here is a basic definition of unit economics: it’s an approach meant to evaluate and calculate the costs and profits of a certain business model in relation to a particular unit. By unit, we mean any quantifiable item that is valuable for the business. It may be, for instance, a booked hostel apartment, a taxi ride, or a client engagement. Unit-level economics answers a simple yet essential question — do we gain revenue from a particular user (unit) or not?

Why unit economics is important

The data generated by unit economics analysis may become an integral component of your brand’s short- and long-term financial planning:

• the unit economics model allows predicting profits: it provides you with a clear, detailed picture of your company’s profitability;
• it provides a great opportunity to optimize your products and enhance their reliability;
• the unit-based approach helps investigate market stability. These economics units are also useful for forecasting the potential of a product or service.

An essential note about the economy of a unit

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 must deduct from the common revenue all the costs related to the economy unit we analyze. Let’s take software integration as a unit 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 fees, payment system fees, and other associated costs.

How to calculate unit economics

With our calculator, you can easily do it.
Explore the science of unit economics and always benchmark your business using these practices. It will surely bring you growth and income!