Unit Economics Calculator Formula
Understand the math behind the unit economics calculator. Each variable explained with a worked example.
Formulas Used
Gross Profit Per Unit
gross_profit_per_unit = selling_price - cogs_per_unitContribution Per Unit
contribution_per_unit = selling_price - cogs_per_unit - operating_cost_per_unit - cac_per_unitUnit Margin
unit_margin = selling_price > 0 ? ((selling_price - cogs_per_unit - operating_cost_per_unit - cac_per_unit) / selling_price) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
selling_price | Selling Price Per Unit(USD) | 120 |
cogs_per_unit | Cost of Goods Per Unit(USD) | 40 |
operating_cost_per_unit | Operating Cost Per Unit (allocated)(USD) | 30 |
cac_per_unit | Acquisition Cost Allocated Per Unit(USD) | 15 |
How It Works
How to Calculate Unit Economics
Formula
Contribution Per Unit = Selling Price - COGS - Operating Cost - Acquisition Cost Unit Margin = Contribution / Selling Price x 100
Unit economics answers the fundamental business question: do you make money on each sale? Positive unit economics means you earn profit on every transaction and can scale profitably. Negative unit economics means scaling only accelerates losses. Startups sometimes operate with negative unit economics temporarily to capture market share, but eventually every unit sold must contribute positive margin.
Worked Example
A product sells for $120. COGS is $40, allocated operating cost is $30, and acquisition cost is $15 per unit.
- 01Gross Profit = $120 - $40 = $80
- 02Contribution = $120 - $40 - $30 - $15 = $35
- 03Unit Margin = ($35 / $120) x 100 = 29.2%
Ready to run the numbers?
Open Unit Economics Calculator