Unit Economics Template

What is Unit Economics?

Unit economics represents the direct revenues and costs associated with a particular business model, expressed on a per-unit basis. For many startups and SaaS businesses, this "unit" is often a single customer or user. It breaks down the fundamental financial building blocks of your business to reveal whether you are making a profit on each sale or customer acquired.

Why it Matters

Understanding your unit economics is crucial for sustainable growth. It helps you answer key questions: Can you scale profitably? How much can you afford to spend to acquire a customer? By tracking metrics like C1, AMPPU, and CAC, you can make data-driven decisions to optimize your pricing, marketing spend, and operational efficiency. Investors deeply care about these numbers as they indicate the long-term viability of your business.

Key Metrics to Track

• C1 (Conversion to First Purchase): The percentage of leads or visitors who make their first purchase. It measures the effectiveness of your sales funnel.
• AMPPU (Average Margin Per Paying User): The average gross profit generated from each paying customer. It helps in understanding the true profitability of your user base.
• CAC (Customer Acquisition Cost): The total cost of sales and marketing efforts required to acquire a new paying customer.
• Revenue: The total income generated from your business activities. Tracking this alongside unit metrics ensures your growth is translating into actual sales.