unit economics

Definition

The revenue and costs associated with a single customer or transaction, supposedly proving your business model works before you scale. Often the awkward math that reveals you lose money on every sale but plan to make it up in volume.

Example Usage

Our unit economics looked great if you ignored customer acquisition costs, churn, and the salaries of everyone involved.

Origin

Business analysis terminology popularized in startup contexts in the 2010s

Fun Fact

WeWork's unit economics famously included 'community adjusted EBITDA,' a made-up metric that excluded most actual costs of running the business.

Source: Business analysis and startup terminology

Related Terms

Intermediate

land grab

Aggressively pursuing market share and user growth at the expense of profitability or unit economics, betting that dominance now will create a moat later. It's monopoly thinking fueled by venture capital.

🚀 Startup / VC

Advanced

washout round

A financing so dilutive that existing shareholders are essentially wiped out, often following multiple bridge rounds and broken promises. The financial equivalent of starting over but with more emotional baggage.

🚀 Startup / VC

Beginner

inbound interest

When investors, customers, or acquirers proactively reach out to a startup rather than being solicited. It's the entrepreneurial equivalent of being asked to the dance instead of doing the asking.

🚀 Startup / VC

Beginner

founder-friendly

A marketing term VCs use to describe their approach, supposedly indicating fair terms and supportive behavior. In practice, it often means 'we won't screw you quite as hard as the other guys.'

🚀 Startup / VC

Intermediate

monetise

The delicate art of figuring out how to extract money from something that users currently enjoy for free, typically resulting in a barrage of ads, paywalls, or premium subscriptions. This verb represents the moment when platforms transition from "community-building" to "shareholder-pleasing," often coinciding with users complaining that everything good gets ruined. Monetization strategies range from subtle to obnoxious, but they all share the goal of turning engagement into revenue.

🚀 Startup / VC

Intermediate

scaling

The corporate fantasy of growing a business exponentially while somehow maintaining quality, usually uttered right before everything falls apart. It's the process of increasing capacity to handle growth—or in startup speak, the thing you'll figure out later after raising millions in VC funding. In tech, it means making systems handle more users; in reality, it means discovering all the shortcuts you took when building the foundation.

🚀 Startup / VC

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