Figure 14 Sept 2026From “What are unit economics?”

The unit economics component card

Map revenue, variable cost to serve, acquisition expenditure, and recovery timing to evaluate commercial viability.

Figure 1The unit economics component card

Component	Definition and boundary	Metric formula	Failure mode if miscalculated	Governance remedy
Atomic Unit	Fundamental economic object	Contracted customer account	Inconsistent unit definition across quarters	Standardize definition by customer tier
Unit Revenue (ARPU)	Net recurring cash inflow	Annualized Contract Value (ACV)	Booking value confused with cash collected	Deduct discounts, refunds, and uncollected bad debt
Cost to Serve (CTS)	Variable hosting, APIs, CS labor	Cloud infrastructure + APIs + Support	Variable costs hidden in corporate SG&A	Strict allocation of customer-facing operational labor
Contribution Margin %	Net cash per revenue dollar	$(\text{ARPU} - \text{CTS}) / \text{ARPU}$	GAAP gross margin substituted for contribution	Calculate contribution margin at account cohort level
Acquisition Cost (CAC)	Fully loaded commercial cost	Total Sales & Marketing / New Logos	Omitting sales management, travel, and tooling	Include fully burdened compensation and overhead
Payback Horizon	Months required to recover CAC	$\text{CAC} / (\text{Monthly ARPU} \times \text{CM}\%)$	Payback calculated on gross revenue	Enforce contribution cash payback threshold (< 14 months)

Swipe or scroll horizontally if the table is wider than your screen.

Source: Author's commercial governance framework grounded in customer valuation and profitability literature from Gupta et al. (2004), Mulhern (1999), and Reinartz and Kumar (2000).

PNG4:3, 1600 × 1200, with the title, the source line and the attribution set in the image isoglu-2026-what-are-unit-economics-fig01.png

From the essay

Growth that compounds

What are unit economics?

Unit economics evaluate direct revenue and variable costs per fundamental business unit. Define the unit, contribution margin, CAC and payback horizon.

4 Sept 2026

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APA 7

Isoglu, S. (2026). The unit economics component card [Figure]. isoglu.com. https://isoglu.com/insights/exhibits/isoglu-2026-what-are-unit-economics-fig01/

BibTeX

@misc{isoglu-2026-what-are-unit-economics-fig01,
  author = {Isoglu, Sinan},
  title = {{The unit economics component card}},
  year = {2026},
  howpublished = {Figure 1, isoglu.com},
  url = {https://isoglu.com/insights/exhibits/isoglu-2026-what-are-unit-economics-fig01/},
  note = {From the essay {What are unit economics?}}
}

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<figure>
  <a href="https://isoglu.com/insights/exhibits/isoglu-2026-what-are-unit-economics-fig01/">
    <img src="https://isoglu.com/social/isoglu-2026-what-are-unit-economics-fig01.png" alt="Figure 1: The unit economics component card" width="3200" height="2400">
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  <figcaption>Figure 1: The unit economics component card. Source: Author&#39;s commercial governance framework grounded in customer valuation and profitability literature from Gupta et al. (2004), Mulhern (1999), and Reinartz and Kumar (2000). <a href="https://isoglu.com/insights/exhibits/isoglu-2026-what-are-unit-economics-fig01/">View exhibit</a>.</figcaption>
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