# Unit Economics

> Sales solve all problems. As long as your Unit Economics are aligned. Some business models have more complexity when calculating the Contribution Margin of each incremental sale. This model shows the fundamentals behind this critical calculation. Beware. Price your product or service too low, and no amount of customers will fix your business.

Published model on Paths: https://getpaths.io/p/unit-economics
Values below are the base case of the published snapshot.

## Drivers

- Revenue per Unit: $100.00
- Variable Cost per Unit: $15.00
- Fixed Costs: $500.00
- Units Sold: 100

## Formulas

- Gross Revenue = Revenue per Unit * Units Sold  -> $10,000.00
- Total Variable Cost = Variable Cost per Unit * Units Sold  -> $1,500.00
- Gross Profit = Gross Revenue - Total Variable Cost  -> $8,500.00
- Contribution Margin = Gross Profit - Fixed Costs  -> $8,000.00
- Gross Margin = Gross Profit / Gross Revenue  -> 85%
- CM per Unit = Revenue per Unit - Variable Cost per Unit  -> $85.00
- Break-Even Units = Fixed Costs / CM per Unit  -> 5.88