unit-economics

name

unit-economics

description

The Break-Even Calculator (BEC) model and Product Arsenal tracking schema from the Ecom Edge Product Arsenal workbook. Concrete formulas for Target CPP, breakeven quantity, net-profit margin accounting for RTO + delivery rate. Used by product-research (GO/HOLD economics), ads-manager (CPP kill/scale gate), store-manager (arsenal metafields), ops-planner (Notion Pipeline columns). Never approve a launch or judge an ad's CPP without running these numbers.

Unit Economics — BEC model + Product Arsenal schema

Source: operator's docs/product-arsenal/Ecom_Edge_Product_Arsenal.xlsx (sheets: Products, BEC, Roposo). This skill is the canonical, versioned form of that workbook so every existing and new Shopify product is tracked and economically gated identically.

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1. The Break-Even Calculator (BEC) — formulas (reverse-engineered, exact)

Worked from the sheet's own numbers (Selling ₹550, Cost ₹189, FAD 0.7, RTO 0.3, CPP ₹55, 100 orders → NET ₹17,610). Use these formulas verbatim.

Inputs (per product)

Symbol	Name	Meaning
SP	Selling price	What the customer pays (₹, GST-inclusive)
C	Cost	Product cost per unit (supplier landed)
FAD	Fulfilment/Delivery rate	Fraction of orders actually delivered (e.g., 0.70)
RTO	RTO rate	Fraction returned-to-origin = 1 − FAD (e.g., 0.30)
CPP	Cost per purchase	Ad cost to acquire one order (₹)
RTO_cost	RTO cost per RTO'd order	Forward + return shipping eaten on a failed delivery (sheet: ₹72/RTO order)
N	Total orders	Orders placed (delivered + RTO'd)

Derived metrics

Profit per delivered order     = SP − C
Revenue                        = N × FAD × SP          (only delivered orders earn)
COGS                           = N × FAD × C
Gross profit                   = Revenue − COGS = N × FAD × (SP − C)
Gross margin %                 = Gross profit ÷ Revenue        (sheet: 65.6%)

Total ad cost                  = N × CPP                (paid on ALL orders, not just delivered)
Total RTO cost                 = N × RTO × RTO_cost
Total cost incurred            = Total ad cost + Total RTO cost

NET PROFIT                     = Gross profit − Total ad cost − Total RTO cost
Net margin %                   = NET PROFIT ÷ Revenue           (sheet: 45.7%)

Breakeven quantity             = Total cost incurred ÷ (SP − C)
                               = (N×CPP + N×RTO×RTO_cost) ÷ (SP − C)
                               (sheet: 7660 ÷ 361 = 21.22 → need ~22 delivered orders
                                to cover the ad + RTO bleed)

Target CPP rule (the scale/kill gate)

From the BEC Target-CPP table (1000→80, 2000→160, 1599→127.92):

Target CPP = 8% of selling price.

This is the maximum acceptable cost-per-purchase. It's the operational translation of the break-even ROAS in docs/limits.md (1.6×) into a per-order ad-cost ceiling.

• Actual CPP ≤ 8% of SP → healthy, scale per ad-scaling-rules
• Actual CPP 8-12% of SP → marginal, hold + optimize creative
• Actual CPP > 12% of SP → kill the ad set (per ad-scaling-rules kill thresholds; CPP is the India-friendly metric — easier to read than ROAS for COD-heavy stores)

Examples: SP ₹899 → target CPP ₹72. SP ₹1,299 → target CPP ₹104. SP ₹1,499 → target CPP ₹120.

Hard economic gate for product-research

A product is not GO unless, at realistic FAD (default 0.70 for India COD) and CPP = 8% of SP:

NET PROFIT per total order  = FAD×(SP−C) − CPP − RTO×RTO_cost   >  0

If this is ≤ 0 at FAD 0.70, the product cannot scale profitably — score it HOLD/KILL in winning-product-criteria regardless of demand. Demand without unit economics is a money fire.

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2. Product Arsenal tracking schema

Every existing AND new Shopify product must carry these fields. Where Shopify metafields make sense, store-manager stores them under namespace arsenal; the Notion Product Pipeline (managed by ops-planner) mirrors them as columns.

Core tracking (Products sheet)

Field	Metafield / Notion column	Notes
Product Name	(title)	—
Status	arsenal.status	Idea / Researching / Sourced / Testing / Tested / Live / Killed
Ads Status	arsenal.ads_status	Not started / Testing / Scaling / Paused / Killed
Comments	arsenal.comments	Free text — test learnings
FB Ad URL	arsenal.fb_ad_url	Meta Ads Library link to the winning competitor ad
Ad URL 2	arsenal.fb_ad_url_2	Secondary reference ad
Competitor Website	arsenal.competitor_url	Their storefront (hand to competitor-spy)
Amazon URL	arsenal.amazon_url	Saturation + price-anchor check
AliExpress URL	arsenal.ae_url	Sourcing reference
Upsell	arsenal.upsell	The bump/cross-sell SKU paired at checkout

Unit economics (BEC sheet, per product)

Field	Metafield / Notion column
Selling price	arsenal.sp (also Shopify price)
Product cost	arsenal.cost (also Shopify cost-per-item)
FAD (delivery rate)	arsenal.fad (default 0.70 until real data)
RTO rate	arsenal.rto (= 1 − FAD)
Target CPP	arsenal.target_cpp (= 0.08 × SP, computed)
Actual CPP	arsenal.actual_cpp (from Meta, updated by marketing-analytics)
Breakeven qty	arsenal.breakeven_qty (computed)
Net margin %	arsenal.net_margin_pct (computed)

Supplier tracking (Roposo sheet — generalises to any supplier)

Field	Metafield / Notion column
Supplier	arsenal.supplier
Supplier cost	arsenal.supplier_cost
Supplier link	arsenal.supplier_url
Daily orders	arsenal.daily_orders
Delivery rate	arsenal.delivery_rate (= FAD, supplier-confirmed)
Tested (Y/N)	arsenal.tested

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3. Who uses this skill

• product-research — run the hard economic gate (§1) before any GO. Capture FB Ad URL, competitor, Amazon, AE URLs in the brief. A 32/35 winning-criteria score still fails if NET PROFIT per order ≤ 0 at FAD 0.70.
• ads-manager — Target CPP (8% of SP) is the per-ad-set kill/scale gate. Pull actual CPP daily; CPP > 12% of SP = kill (aligns with ad-scaling-rules).
• store-manager — write the arsenal.* metafields on every product create/enrich. Set Shopify cost-per-item from arsenal.cost.
• ops-planner — mirror the arsenal schema as columns in the Notion Product Pipeline DB so the workbook and Notion never drift. Keep docs/product-arsenal/Ecom_Edge_Product_Arsenal.xlsx as the offline source-of-truth the operator edits.
• marketing-analytics — update arsenal.actual_cpp and arsenal.net_margin_pct daily from live Meta + Shopify; flag any product whose actual CPP breaches Target CPP.
• inventory-planner — arsenal.daily_orders × lead time feeds the reorder math in inventory-thresholds.

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4. Hard rules

• Never approve a launch without NET PROFIT per total order > 0 at FAD 0.70 and CPP = 8% of SP.
• Never let an ad set run with actual CPP > 12% of selling price for >2 days (kill it).
• Always default FAD to 0.70 for a new India COD product until 50+ real delivered orders give a true rate; then use the real number.
• Always compute Target CPP = 8% of SP and store it on the product — it's the single number ads-manager checks.
• RTO_cost default ₹72/RTO order until courier invoices give the real figure; revise per supplier.
• The xlsx in docs/product-arsenal/ is the operator's editable master. Agents READ the schema from this skill, WRITE values to metafields + Notion — they don't edit the xlsx.