Unit Economics for your Startup Financial Projections

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There are two ways to calculate Unit Economics for your startup: 1. Per Unit and 2. Per Customer. This video walks you through both including simple formulas, breakeven calculations, and unit economics examples from WeWork and Uber. There's also a section on calculating customer lifetime value (LTV) and customer acquisition cost (CAC).
0:00 - Intro to Unit Economics
0:10 - Two Main Types
0:48 - Per-Unit and Breakeven for Lemonade
2:33 - Unit Economics for WeWork and Uber
4:45 - Two Paths to World Domination
6:20 - Per-Customer Unit Economics
8:20 - Lifetime Value (LTV) for a Coffee Shop
9:28 - Lifetime Value (LTV) for a Subscription Business Like Netflix
11:43 - Calculating Monthly Churn
12:07 - Calculating Global CAC (Cost to Acquire a Customer)
13:01 - Calculating Campaign-Specific CAC (Cost to Acquire a Customer)
14:37 - Find Your CAC for $70
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[@sanuallahkhan8891]

Great teacher and explainer

[@zhandosyembergenov1990]

Thanks Mike, absolutely loved the content, simple and easy to follow with great real life examples. Kudos

[@bikocodes9834]

Thank you Mike. You have saved a start-up here. Thanks once more.

[@rnsjnr]

Thanks Mike; really appreciate how you show the relationships between the different metrics. So useful.

[@william_chidube]

Great, great work Mike. Thank you.

[@vasudevddn98]

Thanks, Mike Sir for this explanation.

[@jvsaglesbebe]

Great content here!

[@sarahfavorites]

Great content, thank you

[@gehnasharma5841]

such a helpful video thanks a lot!

[@edoodozor5732]

Thank you, Mike!

[@michelriecken2117]

Uh..... So Good! This information will help us skyrocket our startup! Thanks so much Mike!

[@MikeLingle]

You bet!

[@hessam97]

A great video. Thanks 🙏🏻

[@Aritra-no6of]

Excellent video🎉.Finally I have found an easy to understand video on unit economics.

[@MikeLingle]

Glad you liked it!!

[@v.yashwanth3683]

thank you

[@samfrmd]

Thanks Mike. I've learned a lot :)

[@MikeLingle]

Glad to hear it!

[@psumoaji]

Thanks Mike :)

[@akshatsingh6154]

This is a great video. Thanks for it.

[@MikeLingle]

Glad you liked it! Please feel free to suggest topics for me to cover.

[@AndresLealco]

Mike! great content! thank you!

[@MikeLingle]

Glad you liked it!

[@alexandercrump2298]

You’re a legend mike!

[@MikeLingle]

Haha thank you! Glad my videos are helping.

[@LatinGlamwithme]

Best video ever thank you !!!

[@MikeLingle]

Wow thanks!

[@swatidoesthings]

This is a great video.

[@MikeLingle]

Glad you enjoyed it! Glad you liked it! Please feel free to suggest topics for me to cover.

[@ratanvaghela7666]

Thanks mike..giving us free knowledge ❤

[@MikeLingle]

More to come!

[@manuelnacer2258]

Great video!

[@MikeLingle]

Glad you enjoyed it

[@alexypolivany7148]

Customer LT can be measured by the formula (1/Churn-rate) you can measure churn rate even if a cohort is still has customers. It can be predictive churn rate.

[@MikeLingle]

Yes I prefer to think of churn in terms of # months people are likely to stick around. 24 months is often a good starting guess. You can then divide 1 by # of months to get the implied monthly churn rate. 1/24 months = 4.2% monthly churn, for example.

[@leoted]

7:21 LTV = -0.1 x CAV is this a typo? Is this, "LTV = -1.1 x CAV", correct ?

[@MikeLingle]

Yes good catch! I think it's actually LTV = 0.9x CAC. I will update it in my slides. Thank you!

[@yuanyuanwu8005]

Thanks Mike for the clear explanation! One question is: for method 2 coffee example, we can use method 1's contribution margin to explain it as well right? In fact, is method 2 more applicable to product whose repeated consumption does not incur substantial costs, such as Netflix? Otherwise, it seems method 1 is always useful.

[@MikeLingle]

Yes you can use method 1's contribution margin to explain the coffee example. No matter which method, you always need to subtract out the variable costs (usually cost of goods sold) to properly calculate the lifetime value.

[@yuanyuanwu8005]

@@MikeLingle Thanks Mike for your reply!