Unit Economics: How to Know if a Project Will Be Successful

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It is impossible to predict the future and know for sure whether a new project will be successful. But you can analyze the prospects and assume how many resources will be needed for the business to work. In the article, we talk about unit economics and give examples.

A unit is a single unit of output that an organization sells. For example, pendant lights, a course on customer focus, or home appliance rental. Using unit economics, you can calculate the profitability of one such unit — how much the organization can earn or lose on it.

Unit economics calculations should be performed before and during the project launch. At the start, this method will help make sales forecasts, and during operation, it will help find problems. It is useful to conduct such analysis regularly to improve the strategy.

In order to understand whether a project social media marketing service will be profitable or not, it is necessary:

select a specific unit;
calculate the expenses and income that this unit can bring or has already brought.
If the calculations show that expenses exceed income, then in this case it is necessary to analyze the expenses - where exactly the funds were spent, what indicators were achieved.


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For example, an organization released a new course on web development, purchased advertising, and received a large number of leads—potential buyers. But after a trial lesson, only a few people purchased the course.

There may be different reasons for this, here are some examples

The target audience was identified incorrectly. The ad was shown to people who did not need the course — the banner did not specify that the training was mainly for front-end developers, and users who wanted to learn back-end development switched to the platform.
The trial lesson was not interesting or did not convey the benefits of the course well enough.
In this case, they do the following: test two hypotheses, look for errors, and change the strategy. For example, they modify the advertising banner to interest the right users, or re-record the trial lesson. And then they calculate the unit economics again. The numbers will increase if the problem was detected correctly.