In plain words
A what-if analysis asks what an offer would earn if one thing were different. The supplier raises the unit cost. The label goes up. The bundle discount is cut from 15% to 10%. You change that input and recompute, leaving everything else alone.
Its value is that it isolates the effect. Conversion and the mix of options are held at what you see today, so the answer is what the change itself is worth, before any change in how customers behave.
Formula
- Effect = profit per visitor with the changed input − profit per visitor today, at today's conversion and mix
Worked example
An offer shows the single bag and the three-bag bundle to 1,000 visitors: 20 buy the single and 12 the bundle. Today that earns $0.88 per visitor.
What if the bag's unit cost rose from $12.00 to $13.50? The engine reprices both options, to $13.86 and $43.56 per order, and puts the offer at $0.80 per visitor. Conversion would have to rise 10.5% to make up for it.
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.
A what-if is not a forecast of behaviour
It holds customers still. It tells you what a cost or price change is worth if exactly the same people buy exactly the same options. Whether they would is a separate question, and only a test answers it.
Using it
Run a what-if before you accept a supplier's increase, change a carrier or redesign an offer. Change one input at a time, so you know what caused the difference. Then use the result to set the bar: how much better the new offer has to convert before it is worth shipping.
In Offer Suite
In Offer Suite a what-if is a forecast or a realized figure recomputed with some costs overridden. The simulator compares a draft with the live version at the conversion each option has today.
Source: Offer Suite's offer simulator.