ordermarges

ordermarges refers to the profitability allocated to individual customer orders. The term is used in various sectors, including retail, manufacturing, and logistics, to assess how much profit an order contributes after accounting for direct costs.

Calculation and components: order margin is typically defined as net revenue from the order minus the variable costs and direct fulfillment costs allocated to that order. The margin as a percentage is order margin divided by net revenue. Net revenue is the price paid by the customer, adjusted for any discounts or refunds. Direct costs include production or procurement costs allocated to the order, as well as picking, packing, shipping, handling, and any promotions or returns associated with the order. Some organizations allocate shared overhead costs using a cost driver, but methods can vary and affect the resulting margin.

Applications: order margins are used to guide pricing decisions, discount strategies, and product mix planning. They help identify which orders or customers are most profitable, inform prioritization in fulfillment, and support inventory planning and channel profitability analyses. The metric can also feed into bundling, upselling, and cost-control initiatives.

Limitations: margins per order depend on cost allocation methods and the treatment of fixed overhead, which can make comparisons across orders or periods unstable. They should be interpreted alongside other metrics such as gross margin, contribution margin, and customer lifetime value.

Variations: some organizations distinguish between gross order margin (before overhead allocation) and net order margin (after overhead). See also margin, gross margin, contribution margin, and order management.