Glossary of offer economics
The words behind offer profit, each with its formula, a worked number computed by the margin engine in Offer Suite's own code, and what it is not. Where Offer Suite pins a term down in its own records, the entry says so.
Cost ledger
Amounts by kind and product over valid time; corrections and backdated rows marked
CorrectedBackdatedVoided
cogssingle-bag$12.00
cogsstarter-kit$21.50
cogsritual-set$30.00
packagingstarter-kit$0.50
gift_fulfilmentall SKUs$0.90
3pl_baseall SKUs$1.18
| Kind · target | Amount | From | To | Recorded | Note |
|---|---|---|---|---|---|
| cogs · single-bag | $12.00 | May 20 | today | Jul 10 | Backdated 51 days |
| cogs · starter-kit | $21.50 | May 20 | today | Jun 2 | Corrects $21.00 (May 20) |
| cogs · ritual-set | $30.00 | May 20 | Sep 13 | May 20 | – |
| cogs · ritual-set | $32.50 | Sep 13 | today | Sep 14 | Backdated 1 days |
| packaging · starter-kit | $0.60 | Jun 1 | – | Jun 1 | Voided Jun 3: Entered on the wrong SKU |
| packaging · starter-kit | $0.50 | Jun 1 | today | Jun 3 | Backdated 2 days |
| gift_fulfilment · all SKUs | $0.90 | May 20 | Jul 1 | May 18 | – |
| 3pl_base · all SKUs | $1.18 | the epoch | today | May 18 | – |
- Average order value (AOV)Total order revenue divided by the number of orders. Useful for spotting a trend, misleading for setting thresholds because it hides the shape of your orders.
- Break-even conversion liftHow much more an offer has to convert to earn, per visitor, what another offer earns: the gap a cheaper offer, a gift or a discount must close.
- Cancelled orderAn order cancelled after it was placed. It is not a sale: no revenue, refund, cost or profit should count for it, whether or not money was refunded.
- Contribution marginWhat an order keeps after every cost that grows with it: product cost, fulfilment, shipping, card fees and refunds. The number an offer should be judged on.
- Conversion rateThe share of visitors who buy. An offer test's most reported number and its least sufficient: a better-converting offer can earn less.
- Cost of goods sold (COGS)What the units you sold cost you to make or buy. In an offer calculation it is charged per unit, gifts included, at the cost that applied when the order was placed.
- Cost restatementRepricing past orders after a cost is corrected or backdated, while keeping what they cost as recorded at the sale. Both numbers stay, so the change is traceable.
- Free-shipping thresholdThe order value above which shipping is free. It costs the shipping revenue of every order already above it, and pays only if enough smaller orders top up.
- Fulfilment costWhat it costs to get an order out: pick and pack, extra picks, the box and the label. Charged per order or parcel, which is why bundles and gifts change it.
- Gross marginRevenue minus the cost of the goods sold, as a share of revenue. The accounting margin: it leaves out shipping, fulfilment and payment costs.
- Gross revenueAn order's revenue as Offer Suite books it: line prices after discounts plus shipping charged, tax excluded, frozen when the order first arrives.
- Landed costA unit's full cost on your shelf: the supplier's price plus inbound freight, duties and brokerage. The unit cost an offer should be priced on.
- Profit per visitorThe profit an offer earns for every visitor who sees it: margin per order times conversion rate. It weighs a lower price against more buyers fairly.
- Realized profitThe profit orders actually made: revenue net of refunds, minus the cost of every unit shipped, per offer and per option, first orders and renewals apart.
- Refund reserveA share of revenue set aside, in a forecast, for the refunds that will come. It turns an unknown future cost into a rate you can price an offer against.
- Refunded revenueThe part of an order's revenue given back, counted after discounts and before tax, and never taken off the order's cost, because the goods already shipped.
- Renewal orderA subscription order the subscriber didn't place by hand, billed by the subscription contract. Priced at the renewal price, without first-order-only costs.
- Retention rateOf subscribers who received an order, the share who receive the next one. Each renewal's profit is weighted by it, so small changes compound quickly.
- Subscribe and saveA standing discount for buying on subscription, often with a deeper first-order discount. Its cost has to be priced over the renewals, not the first order.