# Unit Economics

*Startups & Venture Capital — Finicade finance glossary*

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.

**Also known as:** contribution per customer, per-unit profitability

**Related terms:** [Customer Acquisition Cost](https://finicade.com/glossary/customer-acquisition-cost), [Customer Lifetime Value](https://finicade.com/glossary/customer-lifetime-value), [Gross Margin](https://finicade.com/glossary/gross-margin), [Burn Rate](https://finicade.com/glossary/burn-rate), [Rule of 40](https://finicade.com/glossary/rule-of-40)

Source: https://finicade.com/glossary/unit-economics