Let’s say you make a product that costs the customer $.99 to buy.
Your cost to make the product was $.49.
Your gross profit on a product sale is $.50.
Let’s say it costs you $.25 to gain a customer through marketing and advertising efforts.
Your net profit is $.25, right?
Those unit economics work in theory. You make more money than you spend in making and marketing the product. Hurry, sell more product!
Not so fast…
How many people and tools does it take to bring the product to market? And what do those people and tools cost the business over the course of a year?
And most importantly, how many products would you have to sell to cover your labor and overhead (including you) this year?
First, make sure your unit economics work. Then, understand what it will take to make enough profit to to cover the true costs of being in business.
Only then can you decide whether you’re up for the challenge of building a sustainable, wealth-building business.