Some businesses look like they are rapidly growing, but they are secretly bleeding cash with every customer. Many innovative companies scale revenue fast, only to discover their fundamental economic model isn’t working.
This is precisely why understanding Unit Economics is so important – they determine the true profitability of your business. It’s about understanding the core financial benefit from each customer, product, or transaction.
In Chapter 4 of my Business Model Design series, titled ‘Unit Economics: The Truth Behind the Model,’ we deep-dive on this subject. I’ll show you how to accurately calculate True Customer Lifetime Value (LTV), accounting for all direct costs and the realities of non-linear customer behavior. We’ll also break down how to precisely measure Customer Acquisition Cost (CAC), even in complex B2B sales cycles. You’ll learn why your Gross Margin per unit is an immediate indicator of product viability and how it differs from LTV. Plus, we delve into common pitfalls to avoid and I provide a self-check audit tool to diagnose your own unit economics health.
Want to make sure your growth engine is truly profitable and sustainable? Watch Chapter 4
In Chapter 5 we’ll be looking at Fixed Costs and CAPEX Investments – how to make sure we are making a net profit.
