Unit economics is a basic concept for understanding whether a business is on the path to profitable growth. Yet companies often fail to apply it when analyzing their financial statements and assessing where profits come from, Albert Ramos, founder of fractional CFO firm Stratego, told CFO Brew.

Per-unit measures of revenue and profitability “should dictate the amount of resources and marketing that you should be pumping” into specific products or business lines, he said.

Ramos, who caters to fitness and wellness companies, said that overlooking per-unit economics is not uncommon. Many operators are guilty of not going through their finances “with a fine-toothed comb,” he said. They will look at top-line revenue, “then different service lines up there, and then they quickly go down to the bottom” of financial statements “to see, what does that look like?”

They may also assume a product or service is performing well because it seems to be broadly liked by customers. “I see this time and time again, because it’s like the sexy line item…everyone loves,” Ramos said. But when he shows his clients all the expenses going into that item, “you might as well just light your cash on fire.”

Case studies. Large, publicly held companies also use unit economics for measuring financial performance.

Do you know which products could be losing you money?—AZ

Liz Benditt was hoping to go international with her company, The Balm Box, in 2024, but the impact of tariffs forced her to hold off on scaling it. Now, skyrocketing fuel costs are making it even harder for her to import products for, and ship out, The Balm Box’s cancer patient care packages.

Benditt said her inbound shipping costs since the Strait of Hormuz closed have doubled, and outbound shipping costs have gone up 20%–25%.

“When I think about transportation costs, I mean, we’re getting hit from both sides,” the founder, and six-time cancer survivor, told CFO Brew.

Benditt isn’t alone in feeling the squeeze; last month, transportation prices expanded faster than in nearly a decade, according to the Logistics Managers’ Index, a joint project between researchers at several US universities, supported by the Council of Supply Chain Management Professionals.

They compile the monthly index, or LMI, from eight industry components, including warehousing, transportation, and inventory.

The volatility is delaying strategic plans.—DL

Feeling forgetful?

You’re not alone; the IT industry is in the midst of a memory shortage that’s adding to budget pressures, delaying projects, and creating a whole lot of stress for IT pros.

The culprit is familiar: AI data centers, where major manufacturers are allocating chip production capacity to meet demand for the high-bandwidth memory these facilities need. Enterprise organizations’ IT departments are left in the lurch, scrambling to secure enough memory to keep AI and other digital projects on track.

Gartner expects PC shipments to fall more than 10% globally this year, ITPro reported, and for DRAM and solid-state drive prices to grow 130% by year’s end. One of the likely outcomes is enterprises holding off on device upgrades.

IT Brew explains how scalpers are capitalizing and enterprises adjusting.—JG

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