In plain words
A renewal order is an order a subscription creates on its schedule, after the first. It is billed at the renewal price, usually the ongoing subscribe-and-save discount, and ships only the products that recur. Welcome gifts, inserts and samples were in the first box only.
Renewals decide whether a subscription offer pays. A first order discounted to win the subscriber often earns little or nothing, and the offer earns its money over the renewals the subscriber stays for.
Formula
- Renewal margin = renewal price − costs of the recurring lines (first-order-only costs excluded)
Worked example
The coffee subscription's first order at $32.00, with a mug, keeps $3.79. Each renewal at $36.00, bag only, keeps $11.68. At 85% retention a subscriber is worth $58.90 over twelve orders.
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 |
| cogs | per unit | −$12.00 |
| pick_pack | per order | −$1.18 |
| packaging | per parcel | −$0.50 |
| shipping | per parcel | −$7.50 |
| processing_fixed | per order | −$0.30 |
| refunds | percent | −$2.00 |
| processing | percent | −$1.16 |
| Gross 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.
A renewal is not a repeat order
A repeat customer chose to buy again; a renewal was billed by a contract. They behave differently: renewals churn on a schedule, repeat orders depend on remarketing. Counting renewals as first orders overstates acquisition and hides the first order's real margin.
Using it
Report renewals apart from first orders, per offer option. The first order tells you what it cost to win the subscriber; renewals tell you what the subscriber is worth. When a subscriber swaps or adds products, the renewal still belongs to the subscription that billed it, so the offer that won the subscriber keeps the credit.
In Offer Suite
Offer Suite recognises a renewal from the order's source: subscription_contract, or anything starting with subscription_contract_, which is what Shopify's billing attempts send. A renewal is attributed to the option whose contract billed it and reported apart from first orders.
Source: Offer Suite's money definitions (decision 41), checked against real Shopify orders.