It is necessary to take into account not only fixed but also variable costs.
Posted: Mon Jan 20, 2025 8:28 am
analysis can be used to develop the company's policy and eliminate weak points.
It is also important to note that only the sold product should be used in calculations. For example, goods that the consumer ordered but has not yet received should not be counted as sold.
It is necessary to control that the formula should take into account only expenses tied to a specific unit. For example, if a seller sells several types of goods and receives a salary for this, then it is necessary to calculate how much of it is spent on servicing the segment, which is the analyzed product. Unit profitability is not tied to traditional time periods, such as a day or a month. It is estimated by cycles that include production and sales of products.
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Client model
In this case, the client is twitter database taken as a unit. This model is perfect for the service sector and for companies that operate on the Internet. As a unit, you can choose either a new consumer or a user who has already started generating income. To determine the best option, you need to consider the specifics of the company. For example, most mobile applications focus on the number of users. The main channel for generating income for such platforms is advertising, which is aimed at a large number of clients. Further, we will talk about users, but the number of clients can also be used for calculations.
The key metrics that are compared against each other are user lifetime value (LTV) and cost of acquisition (CAC).
Note: LTV in unit economics does not necessarily correspond to its literal meaning – “lifetime” can be the period in relation to which a business decision is made.
Rules for calculating unit economics
Please note some features of calculating unit economics indicators:
For different segments and channels, it is necessary to take into account the difference in their economy. For example, unit economy can converge on traffic from VKontakte, but not from Odnoklassniki. The same applies to customer segments. Different categories of consumers have different indicators.
Cohorts. A cohort is a group of customers that a company has acquired in a given period. There may also be discrepancies here. For example, unit economics may converge for customers who arrived in July, but not for those who arrived in August. The concept of cohorts applies not only to consumers, but also to products and other types of units. For some categories of goods or services, the reason for the discrepancy lies in the seasonality of the product, but this is not always the case.
Do not forget that only what is currently in the consumer's possession is used for calculations. For example, if you purchased raw materials for the production of 500 items and paid workers for this amount of work, but sold only 200, then you need to take into account the costs of 200 sold.
Only those costs that are directly related to a given unit are considered. For example, if a salesperson sells beds for half a day and refrigerators for the rest of the working time, then it is necessary to calculate the part of his salary that is related to the sale of beds.
The calculations do not include the actual movement of money in the accounts, but rather the "virtual" finances in the period when the company's product was sold. For example, if materials and labor of workers for the production of products were paid for in August, and the funds for their purchase from buyers will be received into the company's account only in October, they must be taken into account in September, if sales occurred in that month.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow
It is also important to note that only the sold product should be used in calculations. For example, goods that the consumer ordered but has not yet received should not be counted as sold.
It is necessary to control that the formula should take into account only expenses tied to a specific unit. For example, if a seller sells several types of goods and receives a salary for this, then it is necessary to calculate how much of it is spent on servicing the segment, which is the analyzed product. Unit profitability is not tied to traditional time periods, such as a day or a month. It is estimated by cycles that include production and sales of products.
Recommended articles on this topic:
Marketing Tips: How to Show That Your Product is the Best
Example of a cooperation proposal: just follow the instructions
Company Marketing Plan: Short and Detailed Versions
Client model
In this case, the client is twitter database taken as a unit. This model is perfect for the service sector and for companies that operate on the Internet. As a unit, you can choose either a new consumer or a user who has already started generating income. To determine the best option, you need to consider the specifics of the company. For example, most mobile applications focus on the number of users. The main channel for generating income for such platforms is advertising, which is aimed at a large number of clients. Further, we will talk about users, but the number of clients can also be used for calculations.
The key metrics that are compared against each other are user lifetime value (LTV) and cost of acquisition (CAC).
Note: LTV in unit economics does not necessarily correspond to its literal meaning – “lifetime” can be the period in relation to which a business decision is made.
Rules for calculating unit economics
Please note some features of calculating unit economics indicators:
For different segments and channels, it is necessary to take into account the difference in their economy. For example, unit economy can converge on traffic from VKontakte, but not from Odnoklassniki. The same applies to customer segments. Different categories of consumers have different indicators.
Cohorts. A cohort is a group of customers that a company has acquired in a given period. There may also be discrepancies here. For example, unit economics may converge for customers who arrived in July, but not for those who arrived in August. The concept of cohorts applies not only to consumers, but also to products and other types of units. For some categories of goods or services, the reason for the discrepancy lies in the seasonality of the product, but this is not always the case.
Do not forget that only what is currently in the consumer's possession is used for calculations. For example, if you purchased raw materials for the production of 500 items and paid workers for this amount of work, but sold only 200, then you need to take into account the costs of 200 sold.
Only those costs that are directly related to a given unit are considered. For example, if a salesperson sells beds for half a day and refrigerators for the rest of the working time, then it is necessary to calculate the part of his salary that is related to the sale of beds.
The calculations do not include the actual movement of money in the accounts, but rather the "virtual" finances in the period when the company's product was sold. For example, if materials and labor of workers for the production of products were paid for in August, and the funds for their purchase from buyers will be received into the company's account only in October, they must be taken into account in September, if sales occurred in that month.
Case: VT-metall
Find out how we reduced the cost of attracting an application by 13 times for a metalworking company in Moscow