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All termsFINANCE & PRICING

Unit Economics

DEFINITION

The revenue and cost of a single customer or transaction, used to prove the business model works before scaling.

In depth

A SaaS has healthy unit economics when LTV > 3× CAC, payback is under 12 months, and gross margin is above 70%. Until all three are true, scaling spend burns cash without building value.

The cleanest way to show unit economics is a one-customer table: ARPU, gross margin $, CAC, payback months, LTV, LTV/CAC. Any investor conversation starts here.

Put it into practice

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Last reviewed 14 April 2026 by Abhi Verma.