“I finally understood what unit-economy is!” I exclaimed to myself. Do not rush to close the article, if you already know what it is. I understood about unit-economy for MY project, and, I hope, this information will help others. Thanks to my friend Kolya, who came to our office to chat about life and prompted these thoughts.

So, when they talk about unit-economy, they put the following question: “How much does it cost you to attract one client?”. For several years I could not answer it. And it really embarrassed me. Our team has grown to 12 people, but for some reason I could not answer such a simple and necessary question.

In order to understand why I could not answer such a question (and how we grew to 12 people at the same time), we must understand what we are doing. Our team is developing a tool for programmers. We make a static code analyzer PVS-Studio . This is a tool that parses the source code of the program and tells the programmer where he has any possible errors. The value of the tool is that it allows you to correct software errors at the stage of writing code (then it is very cheap), and not at the testing stage, or even more so when the product is deployed to a million users. Product is expensive. A minimum annual license for a team of up to 9 people costs more than € 5,000. Extension - 80% of the price. To promote the product, we came up with a special format of articles. We check well-known open source projects like Chromium, Unreal Engine, Doom, etc. and write about the errors found. Errors are always in any project, this is normal. We do not advertise directly to the tool. We just find errors and say that we found them with PVS-Studio. If you want - check your project, suddenly something interesting will be found. This works very well, because programmers (our users) do not believe in advertising, and this is not advertising. So, people download the trial, check their project, maybe they find something and run to the manager to buy a tool. It usually takes 1-3 months (sales cycle).


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So, what is the unit economy here? Not known! How much does one customer cost? Unclear! You can of course calculate the cost of writing an article, publishing, attracting an audience ... We do it and we know that one article costs us about 3-5 man-weeks of work of a qualified programmer. But this is not the answer to the question: "How much does one customer cost?"

However, after Kolya’s visit today, my colleague and I once again discussed this issue. And they realized that the question is wrong! In fact, the question should be: “This is the direction that you guys are doing, is it profitable or unprofitable?” It is important to know the answer to this question. But this does not always work, so sometimes the question is formulated as “how much does it cost to attract a client?” Or “how much money does one client bring?”. Let's look at examples from our business.

So, our main direction is the PVS-Studio code analyzer. Is it profitable or profitable? How to answer this question? Very simple. We take the income for the last year. We take the costs for the past year. If the difference suits us, then the direction is profitable. It is not important for us to know how much one PVS-Studio client costs, if we attract it with the help of articles. It is important for us to know that on the whole the direction is profitable and we are doing everything correctly.

Another example. PVS-Studio includes the most popular version for the Microsoft Visual Studio environment and a less popular version for the Embarcadero RAD Studio environment. There are almost no support issues with Embarcadero RAD Studio. This version is almost not for sale. The cost of its support and development is more than revenues. Therefore, the support of Embarcadero RAD Studio in our tool as a direction is not profitable. And we recently killed this area. Unconsciously counting the very unit-economy.

Another example. We have a simpler version of our CppCat product. There is another pricing and licensing policy. A personal license costs $ 250 (compare with € 5000 for PVS-Studio). We counted how much the product brought over the last year, counted the costs. And they decided to kill him soon. Unit-economy has not converged. Why not kill him right away? Because it costs money: alteration of the site, letters to users, questions from current customers ... But we will kill in the near future.



So, with products, it seems, it becomes clear. And what about the services? Is it possible to count unit-economy there? Some time ago we began to provide our clients with consulting services. Roughly speaking, a very special custom development. They counted the contract on the basis of six months of work, considered the costs. In the black? We continue to work, unit-economy has converged. Extend the contract for another year. Periodically recalculated. That same unit-economy. And some contracts have to be interrupted. Does not converge.

Last example. We decided to sell an additional service, the development of special diagnostic rules for the analyzer at the request of customers. This is a search for errors of special types that are interesting in a particular project or company. We figured how much it costs to make one rule. So much Understood that for this amount to sell one rule makes no sense. And minimally made it possible to order a package of improvements of the three rules. Such money is already interesting. So you can sell. Unit economy converged.

Why, then, everyone asks "how much does a client cost?" And "how much money does the client bring?" Very simple. They have no history. And they have no clear marketing for them. And for us, marketing is understandable (how to attract users) and the history of income / expenditure over the past year is understandable. Therefore, it is important for us to control the question “is the direction profitable?”, And not “how much does the client pay?”.

And if a team only does something for 3 months and even has 10 sales, then yes, the only question that you can ask is “how much does the customer cost / does it bring?”.

Additionally

• Founder's advice. Yevgeny Ryzhkov, Director General of “CExProVer” and PVS-Studio developer.