Inch, foot, fathom, mile, or parsec?
At the core of the financial plan is a concept called the “unit sale.”
For most businesses, there is some packaged product or service that customers buy. For startups, there is typically just one such product or service, albeit sometimes in a few different sizes.
For example, for a car manufacturer, the unit is one car. When you go to the dealer to buy a car, you get a whole car, not an à la carte mix of three seats, five wheels, one door, half an engine, and three batteries.
For an airline, the unit is a one-way flight. I may in fact switch planes in an airport during that flight, but when I buy a ticket, I’m buying one flight from city A to city B, regardless of whether it is a direct flight or multiple hops.
For a supermarket, the unit is a “shopping cart.” The transaction between market and customer involves the whole cart of items, not the individual items within the cart. The same is true for ecommerce sites, which use a virtual shopping cart.
For a magazine, the unit is an annual subscription, since, like the cart, the transaction involves the subscription, not the individual issues.
On Google, the unit is the search or the page view. In the case of Google, you and your attention are the product. The customer is the advertiser, and they purchase ad placements per search or per page.
For the lemonade stand, the unit is the glass of lemonade. Lemonade stands do not traditionally sell pitchers or bottles or six-packs or a subscription of lemonade delivered daily to your home. They sell one glass at a time.
What is the unit sale for your business?