Can You Do It Again?

What is Incremental Profitability?

The incremental profitability of a customer is the contribution of that customer to your fixed costs- i.e. sales over time minus the variable costs of fulfilling that customer over time -typically including variable costs of goods sold, fulfillment costs, and any shipping costs.

This data on the costs of customer acquisition and the incremental profit overtime of the customers acquired is very valuable information for an entrepreneur. According to my VC friends, only about 10% of the companies they look at use this information. If you want to be in the top decile, start collecting it and using it to manage your venture.