Unit economics

This is the lesson that decides whether your company can become a business. Unit economics is about the economics of a single customer or unit: do you make money on every customer you acquire, or lose it? Get this right and growth can make you rich. Get it wrong and growth just makes you broke faster.

Contribution margin per unit and per customer

Start with the simplest thing: contribution margin. It is the price the customer pays, minus the variable costs of delivering to that specific customer. If you sell an item for 300 NOK that costs you 120 NOK in purchasing and shipping, the contribution margin is 180 NOK. This is the amount left to cover fixed costs and eventually become profit.

For a subscription model you think per customer over time: what does a customer contribute each month after the variable costs? This is the building block for everything that follows.

Customer acquisition cost (CAC)

CAC stands for customer acquisition cost: what it costs on average to acquire one new paying customer. The calculation is simple — take everything you spent on marketing and sales in a period, and divide by the number of new customers you got.

Say you spent 50,000 NOK on ads and sales in a month and got 100 new customers. Then CAC is 500 NOK per customer. This number surprises most founders, because "free" channels are rarely free once you count your time.

Customer value and the ratio between them

Customer value (often called lifetime value) is the sum of the contribution margin a customer produces across the whole relationship. For a subscription customer: contribution margin per month multiplied by how many months the customer stays.

Let's put the numbers together with a made-up example:

• Each customer contributes 200 NOK in margin per month.
• A typical customer stays 10 months (because churn is around 10% a month).
• Customer value = 200 × 10 = 2,000 NOK.
• It cost 500 NOK to acquire the customer (CAC).

The ratio of customer value to CAC is then 2,000 divided by 500, or 4 to 1. A common rule of thumb says a ratio around 3 to 1 or better is healthy, while 1 to 1 means you lose money as soon as you count the fixed costs. Use the rule as a pointer, not a law.

When the model actually works

Two questions decide whether the unit economics hold:

1. Is customer value comfortably larger than CAC? If you spend more acquiring a customer than the customer ever gives back, you are scaling a loss.
2. How quickly do you get the money back? Payback time is how many months must pass before the contribution margin has covered CAC. In the example above: 500 divided by 200 = 2.5 months. The shorter it is, the less capital you need to grow.

A company like Oda operates in groceries, where the margins per basket are thin — so basket size, repeat purchases and efficient delivery become decisive for the unit economics to add up. The point is universal: growth solves nothing if each individual customer loses money.

When the ratio is too weak, you really only have three levers to pull: get the customer to pay more or stay longer (raise customer value), make the delivery itself cheaper (raise the contribution margin), or acquire customers more cheaply (lower CAC). Often the cheapest win is to reduce churn. Keeping customers just a few months longer raises customer value directly, without spending a single krone more on marketing — which is why retention is almost always a better first investment than more advertising.

Do this now

Calculate your own unit economics with three numbers: (1) contribution margin per customer per period, (2) how long the customer stays, and (3) what it costs to acquire a customer (CAC). Work out customer value and the ratio to CAC, plus the payback time. If the ratio is under 3 to 1, mark which of the numbers is easiest to improve first.