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Business & Commerce

Pricing, sales, inventory and growth metrics used to run and scale a commercial business

Selling Price from Markup

Basic
SP=Cost×(1+m)SP = Cost \times (1 + m)

The price to charge after adding a percentage markup to unit cost.

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Discounted Price

Basic
P=List×(1d)P = List \times (1 - d)

The final price after applying a percentage discount to the list price.

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Sales Tax

Basic
Total=Price×(1+t)Total = Price \times (1 + t)

The amount payable once a sales-tax or VAT rate is added to the price.

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Revenue

Basic
Revenue=Price×QuantityRevenue = Price \times Quantity

Total income from sales before any costs are deducted.

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Contribution Margin

Intermediate
CM=PriceVariable CostCM = Price - Variable\ Cost

The amount each unit sold contributes toward covering fixed costs and profit.

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Contribution Margin Ratio

Intermediate
CMR=PriceVariable CostPriceCMR = \dfrac{Price - Variable\ Cost}{Price}

Contribution margin expressed as a fraction of the selling price.

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Break-Even (Units)

Intermediate
Q=Fixed CostsPriceVariable CostQ = \dfrac{Fixed\ Costs}{Price - Variable\ Cost}

The number of units that must be sold to exactly cover all costs.

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Margin of Safety

Intermediate
MoS=SalesBreak-evenSales×100%MoS = \dfrac{Sales - Break\text{-}even}{Sales}\times 100\%

How far sales can fall before the business hits its break-even point.

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Economic Order Quantity (EOQ)

Intermediate
EOQ=2DSHEOQ = \sqrt{\dfrac{2DS}{H}}

The order size that minimizes total inventory ordering and holding costs.

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Customer Acquisition Cost (CAC)

Intermediate
CAC=Sales & Marketing CostNew CustomersCAC = \dfrac{Sales\ \&\ Marketing\ Cost}{New\ Customers}

The average cost to win one new customer.

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Customer Lifetime Value (CLV)

Intermediate
CLV=ARPU×Gross MarginChurn RateCLV = \dfrac{ARPU \times Gross\ Margin}{Churn\ Rate}

The total profit expected from a customer over the whole relationship.

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Churn Rate

Intermediate
Churn=Customers LostCustomers at Start×100%Churn = \dfrac{Customers\ Lost}{Customers\ at\ Start}\times 100\%

The percentage of customers who stop buying over a period.

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Conversion Rate

Intermediate
CR=ConversionsVisitors×100%CR = \dfrac{Conversions}{Visitors}\times 100\%

The share of visitors or leads that take the desired action.

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Month-over-Month Growth

Advanced
g=(V1V0)1g = \left(\dfrac{V_1}{V_0}\right) - 1

The percentage change in a metric from one period to the next.

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