Unit economics

Unit economics is the profitability of a single order or a single product rather than of a period: what one sale earns after the costs it causes. It is the level at which growth is decided, because scaling a business with negative unit economics multiplies the loss rather than diluting it.

A store with healthy unit economics and a bad month has a volume problem, which more sales fix. A store with weak unit economics and a good month has a structural problem, which more sales make worse. The two look identical on a revenue chart and require opposite responses.

The walk is short: net price, minus goods, minus the parcel and the payment fee, minus the advertising the order needed. What survives is what the order contributed towards rent, salaries and profit, and the arithmetic works on a single product as readily as on a whole store.

It is also the honest test for a price change, a new channel or a discount: each of them changes the unit before it changes the total, and the total is where the change becomes visible far too late.