Unit Economics
Definition
The direct financial metrics associated with a single commercial unit, covering the cost of acquiring the unit, the gross profit contribution from the unit over its lifetime, and the ratio of lifetime value to acquisition cost. Unit economics are the primary mechanism by which the financial sustainability of a business model is assessed at the individual customer level, independent of scale effects and fixed cost allocation.
Common Misapplication
The most common misapplication is presenting unit economics using metrics that are not directly comparable: lifetime value on a revenue basis paired with customer acquisition cost on a fully loaded basis produces an artificially high LTV to CAC ratio. Both sides of the ratio must use consistent cost treatment.
FFI Standard Reference
This term is defined and applied in Book 2, Section 2.2: The Unit Economics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Unit Economics. https://ffistandard.org/glossary/unit-economics/. 2026.