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Unit Economics

Unit economics is the study of the revenue and cost associated with a single customer or transaction. The two most-watched unit-economics metrics are LTV (what a customer is worth) and CAC (what a customer costs to acquire).

Positive unit economics means each new customer contributes more than they cost. Negative unit economics means growth destroys value: every new customer makes the business worse. Investors care about this ratio more than any other single measure.

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