Unit Economics
The direct revenue and cost tied to a single unit sold, used to judge whether a product is actually profitable.
In practice
It's calculated by subtracting every direct cost tied to one sale - product cost, marketplace fees, shipping, payment processing - from the price charged, which often reveals a product is less profitable than its top-line revenue suggests.
A product sells for $30, but after $12 in cost of goods, $4.50 in marketplace fees, and $6 in shipping, the true unit economics leave only $7.50 of contribution margin.
Why it matters
A product can look successful by revenue alone while quietly losing money on every sale - unit economics is what actually reveals that, before it compounds at scale.
Worth knowing
- Should include every direct cost: product cost, platform fees, payment processing, and shipping.
- Contribution margin is the number that determines whether scaling the product helps or hurts.
- Worth recalculating whenever a major cost input changes, like a fee increase or shipping rate hike.
Start the conversation
Let's talk it through
Tell us where things stand with putting unit economics into practice and we'll respond with next steps, no forms, no waiting in a queue.
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