When it comes to measuring subscription businesses, unit economics are crucial.
Miscalculating or misinterpreting these numbers can be really harmful for your business.
This set of metics will tell you if you’re building a sustainable business, and that is only possible with profits. One can say that making no profits is not necessarily bad, pointing Amazon as an example.
Amazon haven’t been profitable for years and still a very successful business. There are good reasons why one would raise capital and make investments that lead you to be unprofitable – like hiring new sales people and accelerating sales on a SaaS business – but they key point here is availability of capital fueling faster growth.
Despite investments, let’s see how to avoid miscalculating or misinterpreting your unit economics.