Expenses serve as the foundation that will drive the Profit and Loss dashboard within Analytics (see screenshot below).
Expense Assumptions are expense figures (actual or estimated) that incurred in the ordinary course of your business. Through the Expense Assumptions functionality, you can create expense profiles and assign them to campaigns. This will help you better track costs associated with running campaigns.
5 Steps to Adding Expenses
Note: It takes up to 24 hours before Expense Assumptions will appear in Analytics.
STEP 1: Create Individual Expense Averages. To calculate each expense assumption, sum the invoices for a period of time (recommend 3-6 months) and divide the sum by the amount of orders you had in the same time period. Use this average as your new expense assumption. See the spreadsheet screenshot example below. You'll use this type of spreadsheet to enter each of your expense assumptions into the platform.
If you do not incur expenses for any one of the expense assumption options below, don’t complete it as part of your expense profile.
System: Expenses associated with system providers (e.g., CRM, Chargeback, Email, Sales Tax, etc.)
Packaging: Expenses associated with packaging costs (not fulfillment but actually the packaging that goes into the shipments).
CPA: Expenses associated with acquiring new customers.
Customer Service: Expenses associated with customer service. If customer service is not outsourced, you can calculate the average internal expense per order.
Fulfillment: Expenses associated to pick and pack fees from your fulfillment center. If fulfillment is not outsourced, you can calculate the average internal expense per order.
Operating: For all other expenses (i.e. rent, lights, salaries, etc) that you want to capture in the P&L dashboard, put the expenses in this assumption.
Postage: Expenses associated with shipping costs (not fulfillment but actually shipping packages to customers).
STEP 2: Enter Expense Assumptions. Add an Expense Profile by going to the Actions drop-down menu and select 'Add'.
Then create a name for the expense profile and save. After you have saved your profile, you can add expense assumptions by clicking the 'Add Assumptions' feature.
To add each expense, go to the Actions drop-down menu and select 'Add'. A window will pop up with options to create the following expense assumptions:
Select if you want the rate to be a percentage or flat and the affected depths (e.g., Initial Only, Skip Rebill, etc).
If you choose a percentage, enter a whole number. For example, if you want to enter 5.5%, enter 5.5 into the rate field and select percentage. If you want to use a flat rate, enter the currency figure into the rate field. For example, if your fulfillment center charges you $1.50, enter 1.50 into the rate field.
STEP 3: Enter Gateway Provider Expenses.
STEP 4: Enter Product COGS (Cost of Goods Sold).
STEP 5: After you have created your expense profiles, you will need to assign them to your campaigns by clicking the 'plug' symbol. The following box will pop up asking you to select the campaigns you would like to add your profile to.
*NOTE* Please keep in mind that if you are assigning profiles to campaigns by entering the CSV list, you MUST click ‘Select’ after entering in the campaign Id’s and then click ‘Save’ in order for your changes to take effect.
After you have selected your campaigns, you will click ‘ Save’ and a new window will populate advising that the profile was successful, or if the campaign you selected currently has a different provider assigned, it will prompt you to select a new campaign or overwrite the current setting. If your assignment was successful, you will be provided with the option to be redirected to your Campaigns page where you can then view your changes.
Expense Assumptions Best Practices
- Non-US Dollar Currencies: If a campaign accepts only non-USD currency, create an expense profile to be use for the specific currency, convert the expense to the currency and then add the relevant campaigns to the new expense assumption profile. This will ensure that your expenses are not under- or over-estimated.
- Conservative Expense Calculations: To calculate each expense assumption, sum the expenses directly from the relevant invoices for a period of time (recommend 3-6 months) and then divide the sum by the amount of orders you generated in the same time period. Use this average as your new expense assumption. See the spreadsheet screenshot example above. You'll use this type of spreadsheet to enter each of your expense assumptions into the platform.