Unit Economics
Definition
The revenue and costs of selling one unit or one order, showing exactly how much profit each sale makes after all variable costs.
Want a deeper explanation?
Formula
Contribution per Unit = Price − Landed Cost − Fees − Fulfillment − Ad Cost per UnitUnit economics turn your P&L into one product at a time. If each sale loses money, more sales only make it worse.
They should be checked for each product and each channel, since fees differ. Watch for: averages that hide a few big SKUs losing money on every unit sold.
Example
A $40 product with a $12 landed cost, $6 of marketplace fees, $7 of fulfillment and $8 of ad cost per unit earns $7 of contribution per unit.