← Business Metric: Operational (all topics)
Unit economics & contribution per order
What it is
The profit or loss on a single transaction after all directly attributable costs - product, delivery, payment, discount, packaging and support. It answers whether the business makes money before overheads
A business with negative unit economics gets worse as it grows, not better
Impact on industries
- The clearest test of whether scale will fix a loss - if each order loses money, volume compounds the problem
- Improving contribution per order flows directly to profit, and is usually faster than cutting overheads
- Definitions vary widely, and costs are easily excluded from the unit to make the number work
- Early negative unit economics can be a deliberate investment in density or habit, but the path to positive must be specific rather than assumed