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Unit Economics | Per-Unit Profitability & Metrics

Revenue & Variable Costs (per unit)
$
$
$
$
$
Fixed Costs & Volume
$
Customer Metrics (CAC & LTV)
$
Total sales & marketing spend / new customers
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Total revenue expected from a customer
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%
Used if LTV not directly entered (LTV = ARPU × Gross Margin % / Churn).
Contribution Margin $0.00 Per unit (Price - Total Variable Costs)
Gross Margin % 0% (Price - COGS) / Price
Net Profit per Unit $0.00 After fixed cost allocation
LTV / CAC Ratio 0.0 Healthy > 3.0
AI Unit Economics Insights
  • Enter your numbers to generate actionable recommendations.
Key Metrics Breakdown
Per-Unit Cost Structure
Payback Period & Break-even
Quick Actions
Payback Period
0 months
CAC / Contribution margin per unit
Break-Even Units (monthly)
0
Fixed Costs / Contribution Margin

Unit Economics: Master Per-Unit Profitability & Scale

The Mahato Traders Unit Economics Calculator helps you understand whether each product or customer generates profit. It calculates contribution margin, gross margin, net profit after fixed costs, LTV/CAC ratio, payback period, and break‑even volume. Use AI‑powered insights to identify the most impactful levers for improving unit economics.

Key Metrics Explained

Contribution Margin per unit = Price - Total Variable Costs (COGS + shipping + fees + commissions). This is the amount that covers fixed costs and profit. LTV/CAC ratio should be at least 3:1 for a sustainable business. Payback period = CAC / Contribution Margin per unit – aim for under 12 months. Break-even units = Fixed Costs / Contribution Margin per unit.

How to Improve Unit Economics

Increase price, reduce variable costs (negotiate COGS, cheaper shipping), lower CAC (optimize ads, referral programs), boost LTV (upsells, retention), or increase volume to reduce fixed cost per unit. Our AI panel suggests the highest‑impact action based on your inputs.

Frequently Asked Questions (FAQ)

Unit economics measures the direct profitability of selling one unit of your product or serving one customer. It answers: 'Do we make or lose money on each sale?' Key metrics include contribution margin, payback period, and LTV/CAC ratio.

Contribution margin per unit = Selling Price - Variable Costs per unit (COGS, shipping, payment fees, commissions). It shows how much each sale contributes to covering fixed costs and generating profit.

CAC is total sales & marketing spend divided by number of new customers acquired. It includes ad spend, salaries, tools, and creative costs. Lower CAC improves unit economics.

LTV is the total revenue a customer generates during their entire relationship with your business. For subscription models: LTV = (Average Monthly Revenue × Gross Margin %) / Monthly Churn Rate.

A healthy LTV/CAC ratio is 3:1 or higher. Below 3:1 indicates you spend too much to acquire customers. Above 5:1 suggests you may be under-investing in growth.

Payback period = CAC / Contribution Margin per unit (or per customer month). It measures how many months it takes to recover the cost of acquiring a customer. Ideal payback is under 12 months, preferably 3-6 months.

Fixed costs (rent, salaries, software) are not included in per-unit contribution margin but are necessary for business viability. Our tool calculates net profit per unit after allocating fixed costs based on monthly volume.

Gross margin per unit = Selling Price - COGS (only). It excludes other variable costs like shipping or commissions. It measures production efficiency.

Seven levers: 1) Increase price, 2) Reduce COGS (supplier negotiation), 3) Lower variable costs (shipping, fees), 4) Decrease CAC (optimize ad spend), 5) Increase LTV (upsells, retention), 6) Boost volume to lower fixed cost per unit, 7) Improve conversion rates.

Break-even units = Total Monthly Fixed Costs / Contribution Margin per unit. Below this volume, you operate at a loss; above, you generate profit.