Profit & Cost Settings

The Profit & Cost Settings page is where you define the essential financial inputs required for the Lifesight UMM Platform to calculate true, channel-level profitability. By configuring these metrics accurately, you can move beyond simple ROAS and understand the real profit generated by your marketing efforts.

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Where to Find These Settings

You can configure Profit & Cost settings in two locations within the Lifesight UMM Platform

• MMM Insights tab: Ideal for inputting settings specific to a particular model's analysis.
• Configurations Page: Under the "Costs" tab for global, account-wide settings.

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All cost metrics entered on this page should be average monthly costs to ensure accurate profit calculations.

Configuring Customer Metrics

This section allows you to define key metrics related to your customer's purchasing behavior, which are foundational for calculating long-term value and conversion metrics.

• Average Order Value (AOV): Enter the typical value of a single order. This figure is used as a basis for calculating order-level profit and various conversion metrics.
• LTV Horizon: Select the time period over which you want to calculate the Lifetime Value of a customer. You can choose from standard options (30, 60, 90, 180, 365 days) or define a custom period.
• Average customer LTV [LTV Horizon] (revenue): Input the average revenue a customer generates over the selected LTV Horizon. This provides a benchmark for understanding long-term customer value against acquisition cost.

Setting Up Your Cost Structure

The Cost Structure section enables you to define both default and channel-specific costs associated with selling your products. This two-level system provides both simplicity and flexibility.

Defining Default Costs

Default costs are the baseline expenses that apply globally to all your sales channels unless you specify an override for a particular channel. This is useful for setting general costs like payment processing or default fulfillment fees.

You can set the following defaults:

• Default Cost of Goods Sold (COGS): Your standard COGS, which can be set as a percentage of revenue or a fixed cost per unit.
• Default shipping & fulfillment cost: The standard cost for shipping and fulfillment per order.
• Default returns allowance: The average cost of returns, typically entered as a percentage to estimate from your historical refund rate.
• Default payment processing fee: The standard transaction fee from your payment gateway.

Adding Channel-Specific Costs

For channels with unique cost structures (like Amazon, which has different fees than your D2C website), you can add channel-specific rules that override the defaults.

To configure a channel:

1. Click Add Channel-Specific Costs.
2. Select the Channel Name from the dropdown menu.
3. Configure the unique costs for that channel:

• Cost of Goods Sold (COGS): Set the COGS as either a percentage of revenue or a fixed cost per unit for this specific channel.

  i Percentage of revenue that goes to cost of goods.

• Shipping & fulfillment cost: The specific fulfillment cost for this channel.

  i $ per order, keeps it independent of price fluctuations.

• Returns allowance: The returns rate specific to this channel.

  i Easy to estimate from historical refund rate.

• Payment processing fee: The payment gateway fee for this channel.

  i Mirrors typical gateway pricing (e.g., 2.9% + $0.30).

Adding Custom Costs

The Custom Costs tab is for any additional expenses that are not covered by the standard cost structure, such as marketplace commissions or special delivery fees.

Channel-Specific Costs

Here you can add costs that only apply to certain channels, such as:

• Marketplace Commission: Fees charged by marketplaces like Amazon or Etsy.
• Affiliate Commission: Fees paid to affiliate partners for driving sales.

Custom Costs

This section allows you to add any other one-off or recurring costs that should be factored into your profit calculation, such as custom "Delivery" or "Shipping" fees that are applied on a per-order basis.

Saving Your Settings

Once you have configured all your customer metrics and cost structures, click the Save button to apply your settings across the platform. These values will then be used to calculate the profit and profit margin displayed in your reports.