How it's calculated
- Margin per order = price + shipping charged − unit cost × units − pick and pack − extra picks − packaging − label − card fees − refund reserve
- Profit per visitor = margin per order × conversion rate
- Lift to match the best = best profit per visitor ÷ this option's profit per visitor − 1
Every figure on this page comes from the margin engine in Offer Suite's own code (packages/engine), the function that prices offers in the product. Money is computed in whole cents and rounded once per line.
Worked example
Three ways to sell the same coffee: one bag at $40.00, three at $102.00 and six at $192.00, all shipped free. Per order the six-pack is best by far: $94.35 against $48.06 and $15.36. The single bag's margin is small because its one label and one pick and pack come out of a $40.00 order.
Fewer visitors buy the bigger options: 3.2%, 1.9% and 0.9% in this example. Per visitor, that puts the three-pack first at $0.91, the six-pack at $0.85 and the single at $0.49. The six-pack would need 7.5% more buyers to catch up, and the single 85.8%.
Assumptions
- Each option is judged as the offer on its own: its conversion rate is the share of visitors who buy it when it is what they see. If your page shows all three at once, use each option's share of visitors who chose it, and add the three results for the page's total.
- Every option ships in one parcel, so the label, box and pick and pack are paid once per order whatever the units.
- Conversion rates come from your own tests or analytics. The defaults are illustrative, not benchmarks.
- Pick and pack $1.18 per order and $0.20 for each extra item are the defaults of the engine's DTC-US profile, a typical third-party warehouse contract. Use your own contract.
- The shipping label ($7.50) is an assumption for a domestic ground parcel of about a pound. Your carrier account or shipping app has your rate.
- Card processing of 2.9% + $0.30 is a common online card rate. Shopify's rate depends on your plan and the card, and your admin shows yours.
- The refund reserve (5%) is a share of revenue set aside for refunds. Cost is not reduced by a refund, because the goods were already picked and shipped.
Questions
What is profit per visitor?
The profit an offer earns for every visitor who sees it: margin per order multiplied by conversion rate. It is the one number that trades a lower price against more buyers fairly.
What is the break-even conversion lift?
How much more of its own conversion an option needs to earn what the best option earns per visitor. An option at 0.60 per visitor needs 25% more buyers to match one at 0.75.
Why not pick the option with the highest margin per order?
Because fewer people buy it. A six-pack can earn more than twice a single bag's margin per order and still earn less per visitor if a third as many visitors buy it.
Where do I get conversion rates for options I haven't sold?
From a split test. Until then, the break-even lift tells you what the test has to show: if a new option needs 40% more buyers to win, a small test will not settle it.