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Vivek Joshi
Director & CEO @ Exc... • 2m
Decoding Unit Economics for Early-Stage Startups Unit economics is your startup’s compass. It tells you if scaling will make you rich—or broke. Here’s how to decode it, step by step: 1. Define a Unit: This could be a customer, order, or subscription—whatever drives revenue. 2. Calculate CAC (Customer Acquisition Cost): Total sales & marketing spend ÷ new customers acquired. 3. Determine LTV (Customer Lifetime Value): Average revenue per user × gross margin × customer lifespan. 4. Find Contribution Margin: Revenue per unit – variable costs. 5. Analyze Payback Period: How long does it take to recover your CAC? 6. Benchmark Your Ratios: Aim for LTV:CAC > 3 and CAC payback < 12 months. Insight: Great unit economics don’t guarantee product-market fit, but bad ones guarantee cash burn. Nail this early—it’s how you turn experiments into scalable, fundable businesses. Early signals matter. Watch them closely. Scale only when the unit math works.
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