📖 Business terms

Unit economics

Does the business make money on one order, one customer, one ride?

Formula

Unit profit = Revenue per unit − Variable cost per unit

Unit economics looks at revenue and cost for a single unit of business — one order, one customer, one store.

If one unit loses money, scaling up only loses more.

🧮 Example

A delivery app earns ₹60 commission per order but pays ₹45 for the rider and ₹25 in discounts → −₹10 per order.

🎯 Interview tip

Ask what changes at scale: does cost per order fall with density, or stay stubborn?

Used in

Learn next

Contribution margin

What each extra unit adds towards covering fixed costs.

LTV : CAC ratio

Is a customer worth more than it cost to get them?

Customer acquisition cost (CAC)

How much you spend to win one new customer.

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