26 Oct 2018, 14:30 — 1 min read
Definition: Economics of One Unit (EOU) is a method used to determine whether a business model can be successful (profitable), by calculating if an individual unit of the good or service would be profitable.
Example: The economics of one unit of sale is calculated by subtracting the variable expenses for a unit from the unit’s selling price. For example, if you are planning to enter the garment manufacturing business, to calculate EOU, you will calculate the cost of producing on unit & compare it with your selling price. If the result is positive, this business is thought to be profitable.
Business Insight: It help calculating the contribution margin. This is the amount per unit that a product contributes toward the company’s profitability before the fixed expenses are subtracted.
Posted byGlobalLinker Staff
We are a team of experienced industry professionals committed to sharing our knowledge and skills with small & medium enterprises.
27 Apr 2022, 12:22
25 Feb 2022, 15:28
25 Dec 2021, 15:29