Profit
What is Unit economics?
The profit and loss of a single unit or a single customer, rather than the business as a whole. If one unit does not work, more volume makes the problem bigger rather than smaller.
Why it matters in practice
Unit economics is the discipline of writing down what actually happens to one sale, in order, until nothing is left out. Start with the price the customer paid, subtract the landed cost of the unit, then the marketplace fee, then fulfillment and shipping, then the expected share of returns, then the advertising it took to win the sale. What survives is the contribution, and it is either positive or the product is a volume problem waiting to happen. The discipline pays off most at decision time. A seller with an honest unit sheet can answer whether to run a promotion, whether to airfreight a restock, and how high an ACoS to accept, all from the same page, because every one of those questions is a claim on the same pool of money per unit.
Want this working in your favor instead of against you? The Strategy Audit names the gap on your own account, the optimizations, a phased plan, and a potential outcome, delivered free.
Back to the full glossary, every term on one page.