How it's calculated
- First order: subscribe and save at the subscribe-and-save price; the discount offer at its own discount; the free trial at $0 plus its shipping; the free product at the subscribe-and-save price with the product added
- Every renewal is the same order for all four: the subscribe-and-save price, the products that recur
- Value per subscriber = first-order margin + renewal margin × subscribers still active at each renewal, over the months you follow
- CAC = ad cost per visitor ÷ conversion rate
- Profit per visitor = conversion rate × value per subscriber − ad cost per visitor
Every figure on this page comes from Offer Suite's own margin engine, the same code the product uses to forecast each offer's and option's profit and to compute realized margin on orders. Money is computed in whole cents.
Worked example
The same $40.00 coffee subscription, renewing at $36.00, with four ways in. Subscribe and save keeps $11.68 on the first order; 30% off keeps $4.31; a free product keeps $7.48; and a free trial, shipping a full bag for $4.95, loses $16.92.
At $1.20 a visitor, the trial's 5.5% conversion buys subscribers for $21.82, the cheapest of the four. But only 40% of them pay for a first renewal, so over 12 months each is worth $3.14 and the trial earns −$1.03 per visitor. Free product earns the most, $0.54 per visitor.
Assumptions
- Each intro is judged as the only offer on the page: its conversion rate is the share of visitors who subscribe when it is what they see.
- Visitors cost the same whatever the intro, so an intro that converts better buys each subscriber for less.
- Each intro keeps its own first-renewal rate, and all four settle at the same rate once early churn is over. If an intro also changes the settled rate, the difference compounds over the months you follow.
- The conversion and retention defaults are illustrative, not benchmarks. A split test of the intros gives your own.
- Profit is counted in the month each order ships, with no discounting for time.
- 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 Shopify Payments' online rate for a standard card on the Basic plan in the United States. The Shopify Payments fees pages list every plan and country; enter 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
Is a free trial better than a discount on the first order?
Only if it brings enough more subscribers who go on to pay. A trial's first order loses its whole product cost and shipping, and trial subscribers renew less. Compare them per visitor: conversion times what each subscriber earns, less what the visitor cost.
Why rank intro offers by profit per visitor, not LTV?
Lifetime value per subscriber ignores how many visitors become subscribers. A deep discount can lower each subscriber's value and still earn more per visitor, because it buys subscribers cheaper. Profit per visitor puts conversion, retention and margin into one number.
How is a free product different from a discount?
A free product costs its unit cost and an extra pick, not its retail price, and it ships on the first order only. A $4 product that feels like $18 of value can cost far less than a $12 discount.
Where do the conversion and retention numbers come from?
From your own split test and your subscription app's cohort report. Until you have them, the lift each intro needs to match the best tells you what a test has to show.