Customer Profitability

Customer profitability measures how much each customer really brings in after deducting all associated costs: COGS, acquisition, shipping, support, returns, discounts. It is the ultimate customer value metric.

Calculation: Customer Profitability = Revenue generated - (COGS + CAC + Service costs + Shipping costs + Returns). A customer can generate a lot of revenue but be unprofitable if they return often, use promotions, or heavily use support.

Identifying profitable and unprofitable customers allows you to adjust your strategies: double efforts on profitable ones, or conversely discourage unprofitable ones (stopping promotions, return fees).

Fullmetrix calculates real customer profitability by integrating all costs and segmenting your customers into profitability tiers (top 10%, median, bottom 10%).