E-commerce Glossary

Unit Economics

Profitability analyzed at the level of a single customer or order.

Unit Economics break down profitability at the unit level: revenue per customer vs. cost per customer. Key metrics are LTV, CAC, the LTV/CAC ratio (ideally > 3), and Payback Period. If your LTV is $200 and your CAC is $50, the ratio is 4x, which is excellent. Strong Unit Economics prove your model is scalable. Without them, growing simply means accelerating losses.

Related terms

AOV (Average Order Value)Average amount spent per order in your store.See definition ARPU (Average Revenue Per User)Average revenue generated per user over a given period.See definition Blended CACAverage acquisition cost including all marketing channels.See definition Blended ROASOverall return on all advertising spend combined.See definition CAC (Customer Acquisition Cost)Total cost to acquire a new customer.See definition Churn RatePercentage of customers lost over a given period.See definition

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