beprofit logo
ProductExpand more icon
profit calc image
Profit Simulators
Tweak your numbers to lift profits up
action card image

Demo Store

Want to see our
dashboard in action?
ResourcesExpand more icon
CompanyExpand more icon
Want to see our dashboard in action?
you can try it here with theDemo Store!

What is an example of customer profitability?

Asked 3 years ago

I am trying to understand exactly how customer profitability works, as I am relatively new to e-commerce. I am reading a lot about how to calculate customer profitability, and what those values mean, but I think it would be the most beneficial if someone could help with an example, and how to analyze it?

Geovanni Buckley

Sunday, October 31, 2021

Customer Profitability means the profit a company earns through a customer. Customers considered to be profitable are those whose revenues exceed their costs by a satisfactory amount.

Let's take an example. You have one customer, David. The per-person cost spent on customer acquisition, serving, and selling is $20 per annum. Considering the sales generated by David, which is $25, we can say that his customer profitability is $5. Take the same example to calculate for a large group and divide the sales per customer by total sales.

So, to maximize customer profitability, you should consider optimizing your customer acquisition costs to keep them to a minimum and consider vending the online products with the highest profitability margins.

Write an answer...


Please follow our  Community Guidelines

Can't find what you're looking for?