Unlock Your Ideal Unit Economics

I noticed two things when talking about unit economics with leaders. The second is the worst.

The first thing is to demonstrate that the dumb cost reduction is not the right way to measure performance on cloud investments. Taking that to the limit, you will end up  turning off all your VMs. Savings will be huge, but what’s the point of that?

Improving your Unit Economics, on the other hand, worth doing because the desired outcome is taken into consideration. In another word, you want to take the most out of every penny spent on cloud.

This is not hard to demonstrate. Now, when you get the leader’s buy in on the unit economic concept, invariably the next question immediately comes: “what is my unit economic?”. And that’s the second and more difficult part.

This is not hard to demonstrate. Now, when you get the leader’s buy in on the unit economic concept, invariably the next question immediately comes: “what is my unit economic?”. And that’s the second and more difficult part.

And that’s the second and more difficult part.

I understand that. It is not easy. I was talking with a senior FinOps leader at FinOps XE last year right after my talk where he had the impression that the “cost per revenue” unit quite didn’t match with all of his workloads, especially when they are on the bottom of layers and layers within an organization, making his area very far away from the front-line revenue generation systems.

So, the question could be: How do I discover my ideal Unit Economics? There is no silver bullet for that. You will need to stop, gather the necessary people and reflect on the value that your service provides.

One question I do on those discussions to help the thought process is this: “If you turn off your system, what will be missed by your customers?” That will give a hint of what the value you deliver. Find a way to measure that, and then, you have your Unit Economics.

I have collected 35 Unit Economics examples that can be used as an inspiration of what could be a good and measurable metrics. Feel free to grab your copy at the link below.

Now it is your turn: What have been your challenges on finding the right Unit Economics for your business?

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