In plain words
The actual fulfilment cost of an order is what the warehouse and the carrier really charged for it. Until the invoice arrives, every margin uses an estimate: the contract's rates, an average label. The actual cost replaces that estimate once it is known.
The two differ more often than brands expect. The parcel was heavier than planned, it went to a far zone, it shipped in two boxes, a surcharge applied. Each difference is small. Across a month of orders they add up to the gap between the margin you planned and the one you got.
Formula
- Realized cost = estimated costs, with each cost replaced by its actual charge where one is recorded
- Variance = actual cost − estimated cost
Worked example
The coffee bag's order was costed with a $7.50 label and realized $17.36. The carrier's charge for that parcel comes in at $9.12.
With the actual charge in place of the estimate, the engine puts the order's cost at $24.26 and its realized profit at $15.74.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| Cost of goods | per unit | −$12.00 |
| Pick and pack | per order | −$1.18 |
| Packaging | per parcel | −$0.50 |
| Shipping label | per parcel | −$7.50 |
| Card fee per order | per order | −$0.30 |
| Refunds | percent | −$2.00 |
| Card processing | percent | −$1.16 |
| Contribution margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
An actual cost is not a corrected estimate
Changing your label estimate changes every future order and every past one costed with it. Recording an actual cost changes one order, the one the charge belongs to. Keep both: the estimate says what you expected, the actual what you paid, and the difference tells you whether the estimate needs fixing.
Using it
Load the warehouse's and the carrier's per-order charges when you can get them, even if they arrive weeks late. Then watch the variance by offer. An offer whose actual costs run above estimate every time has a cause worth finding: a heavier parcel, a second box, a gift that ships from somewhere else.
In Offer Suite
Offer Suite can record what an order really cost for an order-level cost, such as a warehouse's charge for its shipments or a carrier label. The actual replaces that cost's estimate in both cost views, and the estimate is kept so the variance can be shown.
Source: Offer Suite's cost ledger.