Unit economics

Unit economics examines revenue and costs around an explicitly chosen economic unit, such as an order, item sold or acquired customer. It is an analytical approach rather than one universal formula. Unit contribution and customer profitability require different data and cost scopes.[1][2]

Choose the unit that fits the decision. An order model may suit shipping policy, while acquisition decisions may need a customer-relationship view. State currency, period, returns, acquisition costs and overhead allocation. Positive item contribution does not prove lifetime customer profitability or that the business covers all fixed expenses.