--- title: "Unit economics: definition, formula and example" description: "The revenue and costs of one unit of sale: an order, a customer or a subscriber. For an offer, the unit that matters is the order, then the customer." url: https://offersuite.io/glossary/unit-economics updated: 2026-10-13 --- # Unit economics The revenue and costs of one unit of sale: an order, a customer or a subscriber. For an offer, the unit that matters is the order, then the customer. ## In plain words Unit economics is the profit and loss of a single unit of whatever a business sells. In ecommerce the unit is usually one order, and for a subscription, one customer over the orders they stay for. The point is to see whether selling one more is worth it before fixed costs come in. If one order loses money after its own costs, selling more of them loses more. If it earns, the open question is whether it earns enough to cover what it cost to win the customer. ## Formula - Per order: contribution margin = revenue − every cost of the order - Per customer: lifetime value − customer acquisition cost ## Worked example One $40.00 bag keeps $15.36. Put a second bag at full price in the same parcel and the order brings in $80.00 and keeps $40.00 of it. The second bag alone added $24.64, far more than the first earned, because it pays for its own cost, one extra pick and its share of fees, and nothing else. The label and the base fee were already paid. ### The example order A $40.00 bag of coffee, shipped free, every cost counted Revenue $40.00 to contribution margin $15.36 (38.4%) Revenue $40.00 Cost of goods −$12.00 Pick and pack −$1.18 Packaging −$0.50 Shipping label −$7.50 Card fee per order −$0.30 Refunds −$2.00 Card processing −$1.16 Contribution margin $15.36 2 declared kinds cost nothing on this option Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost. ## Unit economics is not the average of the income statement Dividing last month's total costs by its orders mixes fixed costs into each order and hides which costs move with a sale. Unit economics counts only what one more order changes. That is what an offer decision needs. ## Using it Start with the first unit in the box, then ask what each further unit adds. The gap between the two is the room a bundle discount has. For a subscription, do the same with orders: what the first order keeps, what each renewal adds, and how many renewals a subscriber stays for. ## Related - [Glossary **Glossary of offer economics** The terms behind offer profit, defined plainly with their formulas and a worked number: contribution margin, profit per visitor, break-even lift and more.](https://offersuite.io/glossary) - [Calculator **Bundle pricing calculator: shipping, subscriptions** Price a bundle against a single unit, one-time and subscribed, with the shipping and pick costs it saves, and the conversion it can lose and still earn as much.](https://offersuite.io/calculators/bundle-pricing) - [Calculator **Subscription payback calculator: CAC and churn** How much a subscriber's first order loses against what you paid to acquire them, how many renewals it takes to earn that back with churn, and in which month.](https://offersuite.io/calculators/subscription-payback) - [Glossary **Contribution margin per order: definition** The contribution margin of one order, in money. The same product earns a different amount as a single, in a bundle or on a renewal.](https://offersuite.io/glossary/contribution-margin-per-order) - [Glossary **Customer lifetime value (LTV): definition** The profit a customer brings over the orders they stay for: the first order's margin plus each later order's, weighted by who is still buying.](https://offersuite.io/glossary/customer-lifetime-value) - [Glossary **Customer acquisition cost (CAC): definition** What it costs to win one new customer: spend divided by customers won, or the cost of a visitor divided by the share of visitors who buy.](https://offersuite.io/glossary/customer-acquisition-cost)