Recently, there was a conversation about what unit economics means in simple terms. On one hand, David Skok suggested measuring two parameters — CLTV and CAC, or customer lifetime value and customer acquisition cost, respectively. This same idea was echoed in Russia by Oleg Yakubenkov in his article explaining unit economics in 30 words. Both are correct, but using this approach directly for decision-making can be problematic. After all, what is gross profit? It's the result of calculating a function dependent on several parameters, namely,

CLTV = (AOV – COGS)×APC – 1sCOGS

according to the Krasinsky formula. These variables affect the outcome of our gross profit. Additionally, businesses have different tasks and internal processes associated with these metrics. For example, some people are responsible for improving the APC metric, while others handle COGS, and others handle AOV. Each group's impact on the metric varies, as do the resources and time required to improve the metrics. 

When resources are limited, it's crucial to understand which metrics need improvement first and which can wait, or else you'll simply run out of resources. This is where all the intricacies of unit economics come into play, as I explain. 

Ultimately, unit economics is a tool that shows at what scale, given certain parameters, the marginal profit from scaling those units covers our fixed costs at a specified level of profitability. 

And yes, I also managed to stick to 30 words. Keep it simple, don't overcomplicate, and always ask yourself, "What's the purpose?"