What is unit economics ?
Unit economics measures the direct revenues and costs associated with a single customer or unit of business to assess profitability at scale.
Unit economics in SaaS typically focuses on the relationship between CLV (Customer Lifetime Value) and CAC (Customer Acquisition Cost). Healthy unit economics means each customer generates significantly more value than it costs to acquire them.
Example: A SaaS company has a CLV of $15,000 and a CAC of $1,500, giving a CLV:CAC ratio of 10:1. This ratio indicates strong unit economics and suggests the company can profitably scale its customer acquisition spending.
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