Customer profitability

Customer profitability examines the result a customer or segment generates during a defined period after assigned costs. It looks beyond product margin or revenue to activities such as order processing, service and retention.[1] Calculate net customer proceeds less an explicitly defined cost scope, producing currency per customer or segment and period.

A large buyer may generate substantial revenue while requiring extensive support or fragmented deliveries. Compare consistent allocation methods and include returns. Historical customer profitability is not automatically future lifetime value. Without allocating the full expense scope, the result should not simply be labelled fully loaded net profit.