Chapter 2 –
The Anatomy of Unit Economics
Understanding Unit Economics Will Help You Answer Important Business Questions
In this FREE chapter download, we start to deep dive into some of the components of your unit economics model. We talk about separating out fixed vs. variable costs and dive into the simple, but important, calculation of contribution margin.
We will lean into a case study of a fictional marketing company called Blast and look at their income statement at increasing levels of detail to start painting the information we will need for more command around customer level profitability.
We end the chapter by doing a breakeven analysis for revenue and projects for Blast’s business.
This chapter will provide perspectives on:
- The difference between fixed and variable costs
- The method of calculating contribution margin
- Why the income statement is not that helpful unless it is structured correctly
Out of this chapter, I want you to be thinking about:
- How can I get more detail from my accountant into my fixed and variable costs?
- Do I have the information I need to calculate my contribution margin?
- What’s my breakeven in terms of the number of customers and revenue?
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