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Startups & Venture Capital

Unit Economics

Also called: contribution per customer, per-unit profitability

Unit economics is the profitability of one customer or transaction, stripped of fixed overhead. It answers whether growth helps or hurts: a company losing money per unit gets worse as it scales, which is how heavily funded businesses can grow spectacularly into insolvency. Positive unit economics with negative company profit is a scaling problem; negative unit economics is a business model problem.

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