# What are unit economics?

> Unit economics are the revenue and costs of one unit you sell, such as one candle, so you can see the profit and margin on each before you scale.

Source: https://learn.ynteractive.com/content/glossary/unit-economics · Updated 2026-10-19 · Free from Stepthrough (https://learn.ynteractive.com)

[Business](https://learn.ynteractive.com/content/glossary#topic-business) · [AI glossary](https://learn.ynteractive.com/content/glossary)

Quick answer

Unit economics are the revenue and costs tied to one unit of what you sell, such as one product or one customer. For a product, the simplest version is price minus the cost to make one unit, which gives the gross profit per unit and the gross margin.

Last updated October 19, 2026

[Take the free module →](https://learn.ynteractive.com/courses/runable-one-person-team/2)Module 2 of the free [Runable for Entrepreneurs: Your One-Person Team](https://learn.ynteractive.com/courses/runable-one-person-team) course, about 10 minutes. No account needed.

Updated October 19, 2026 · By [Robert Breen](https://learn.ynteractive.com/content/about)

## Why it matters for a small business

If the cost per unit is wrong, everything built on it is wrong: the price, the margin, how much stock a budget buys, and whether the business can grow. It is the first number a lender or investor checks.

## Harbor & Pine unit economics (made-up example)

| Line | Math | Result |
| --- | --- | --- |
| Materials per candle | $1,000 ÷ 60 candles | $16.67 |
| Gross profit per candle | $30 − $16.67 | $13.33 |
| Gross margin | $13.33 ÷ $30 | 44% |

Materials only, before market fees, shipping and labor. From Runable's corrected plan in the business plan lesson.

## In a real lesson: Turn Your Research into a One-Page Business Plan using Runable

In the [Runable business plan lesson](https://learn.ynteractive.com/content/runable-one-page-business-plan), the first draft said about $9 of materials per candle and a 70% margin. Its own budget put $1,000 of materials into 60 to 80 candles, which is $12.50 to $16.67 each. Asked to fix it and show the math, Runable added a unit economics table with a 44% margin at 60 candles.

[Try this lesson free](https://learn.ynteractive.com/modules/runable-one-page-business-plan) or [read the step-by-step guide](https://learn.ynteractive.com/content/runable-one-page-business-plan).

## Common confusions

### Unit economics vs a budget

A budget is the total you plan to spend. Unit economics divides it by what you make, to show the cost and profit on each unit.

## Tips

- Divide the budget by the quantity yourself.
- Say what the margin includes and leaves out.
- Use real supplier quotes, not estimates, before you order.

## Related terms

[Gross margin](https://learn.ynteractive.com/content/glossary/gross-margin) · [AI math errors](https://learn.ynteractive.com/content/glossary/ai-math-errors)

## More Business terms

[Upsell](https://learn.ynteractive.com/content/glossary/upsell) · [Utilization rate](https://learn.ynteractive.com/content/glossary/utilization-rate) · [UTM parameters](https://learn.ynteractive.com/content/glossary/utm-parameters) · [Vendor management](https://learn.ynteractive.com/content/glossary/vendor-management)

## Where you use it: free lessons

- [Turn Your Research into a One-Page Business Plan using Runable](https://learn.ynteractive.com/content/runable-one-page-business-plan) (Runable, 10 min)

## Frequently asked questions

**What is the difference between unit economics and gross margin?**

Unit economics is the full picture for one unit: price, costs and profit. Gross margin is one result from it: gross profit divided by price.

**Can AI calculate unit economics for me?**

It can draft them, but check the math. In our test Runable's first plan said $9 a candle when its own budget meant $16.67.

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