Unit Economics as a Tool for Analysing Business Model Efficiency

In the modern digital economy, the assessment of business performance is increasingly shifting from aggregated financial reporting to customer-focused metrics. The diploma thesis 'Unit Economics as a Tool for Analysing Business Model Efficiency' examines unit economics as a key approach to assessing sustainable profitability, identifying growth drivers and evaluating the scalability potential of business-to-consumer (B2C) and business-to-business (B2B) business models. The results revealed key challenges for each model: a high customer churn rate and a long customer acquisition cost (CAC) payback period for the model, and a lower customer lifetime value (CLTV)/customer acquisition cost (CAC) ratio than the benchmark metric in the B2C segment.

Problem

In the modern digital economy, the assessment of business performance is increasingly shifting from aggregated financial reporting to customer-focused metrics.

Solution and Method

The diploma thesis 'Unit Economics as a Tool for Analysing Business Model Efficiency' examines unit economics as a key approach to assessing sustainable profitability, identifying growth drivers and evaluating the scalability potential of business-to-consumer (B2C) and business-to-business (B2B) business models. In the theoretical part, the research examines the methodology for calculating unit economics indicators and their connection with classical financial analysis, demonstrating that unit economics complements and extends traditional approaches to assessing business efficiency.

The practical part of the research focuses on two small and medium-sized enterprises from the United Kingdom: the first operating an e-commerce model (B2C) and the second using a subscription model (B2B). Based on the calculations, methodological specifics in the calculation and interpretation of metrics for both types of business models were analysed.

Results

The results revealed key challenges for each model: a high customer churn rate and a long customer acquisition cost (CAC) payback period for the model, and a lower customer lifetime value (CLTV)/customer acquisition cost (CAC) ratio than the benchmark metric in the B2C segment. Recommendations were provided for improving the indicators to increase efficiency before further scaling, as scaling a business model whilst disregarding negative unit economics metrics leads to growth in operational losses, which can consequently result in financial failure.

The diploma thesis also examines the impact of human capital on improving unit-level efficiency and confirms that strategic talent management directly contributes to increasing CLTV and reducing CAC, thereby strengthening the company's overall financial sustainability. In conclusion, unit economics represents a fundamental tool for assessing business model profitability and a key metric in making investment decisions aimed at sustainable growth.