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Case type 23

Unit economics and subscription businesses

Whether a business makes money on each order or customer: contribution per order, customer acquisition cost (CAC), lifetime value (LTV), churn, and cohorts.

18 min1 lesson Last reviewed
Start the lesson Unit economics and subscription businesses

Key takeaways

  • Build contribution per order from price to profit.
  • Before asking how to grow, check that each order or customer makes money; then grow the units that do.
  • Calculate CAC, LTV, LTV/CAC, and CAC payback.
  • Read a cohort to find churn.
  • Find the levers that fix negative unit economics.
By the end you will be able to
  • Build contribution per order from price to profit
  • Calculate CAC, LTV, LTV/CAC, and CAC payback
  • Read a cohort to find churn
  • Find the levers that fix negative unit economics