Unit Economics
Enter four numbers and see what one customer is worth, and how long it takes to earn back what you spent to win them.
What it is
Four numbers, two answers. Your mentee sees what one customer is worth and how fast their cost comes back.
When to send it
Send it once sales come in. It needs real customers, even a few, to give numbers worth talking about.
- Before a price changesee what a higher price does
- Growth without cashwhen sales rise but money does not
- Before raising moneyknow the numbers first
Filling it in
Fifteen minutes, in two steps. Enter four numbers, then choose the lever you will work on.
- Enter four monthly numbersRevenue, margin, customers lost and the cost to win one.
- Watch the results changeThey update as you type, with a rule of thumb beside each.
- Choose one leverPick price, margin, keeping or winning customers, and say how.
Reading the answers
Find the guessed number first. Each result is only as good as the weakest of the four numbers behind it.
- Value to costbelow 1 to 1, each customer costs more than they bring
- Cost earned back inmonths of margin to repay winning one customer
- The lever they chosecompare it with the longest bar; ask why
Questions to ask
Ask, then ask once more. People who ask follow-up questions are liked more (Huang and others, 2017).
- Which number is a guess?then: how could you measure it?
- Which lever is cheapest to move?then: what would you try first?
- What should these be in six months?then: what has to change for that?
Why it works
A business can grow and still lose money on every customer. These two numbers show it early.
Sources
How a tool works on Mentornity
- 1The mentor picks a tool from the library and sends it with a short message.
- 2The mentee fills it in step by step; the answers are saved as they go.
- 3Both see the answers, comment on any part and agree the next steps.
- 4Only the two of them see the answers, not the program admins.
Guides for both sides
-
Unit Economics for MentorsFor mentors and coaches: when to send Unit Economics, how to read the four numbers, which questions to ask and how to pick one lever. -
Unit Economics for MenteesFor mentees and founders: what Unit Economics shows, how to fill it in, where to find it and what your mentor does with it.
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