Unit economics

Unit economics is the per-customer maths that decides whether a business actually makes money as it grows. Instead of looking only at total revenue, it asks what one customer costs to acquire and what they are worth. The two headline figures are customer acquisition cost (CAC) — the marketing and sales spend to win a customer — and lifetime value (LTV) — the total profit that customer brings before they leave, which depends on the revenue they pay and the churn rate at which customers cancel. Growth only pays for itself when LTV comfortably exceeds CAC. Meanwhile burn rate, the cash a startup loses each month, and its runway, how many months that burn can last, decide how long there is to get the unit economics right. For an AI product there is a twist: serving each user consumes compute, so inference is a real cost of goods sold — even free users burn money.