Marketing Profitability & Incrementality Analyzer

This tool measures the true effectiveness of your campaigns by isolating their incremental revenue and profit contributions, using a rigorous test vs. holdout methodology that compares the performance of an ad-exposed group against a control group.

Why Use This Calculator?

This tool breaks down your campaign performance into clear, actionable metrics:

  • Incremental Revenue – Extra revenue generated by your campaign compared to baseline
  • Incremental Profit Contribution – Additional profit generated after subtracting variable costs and marketing spend
  • Customer Acquisition vs. Lifetime Value – Ensuring profitable customer growth
  • Break-even Analysis – Minimum revenue each new customer must generate to cover extra costs
  • Statistical Confidence – Validation that your results are statistically significant
1
Campaign Data
2
Costs & Acquisition
3
Customer Value
4
Results

Demo Scenarios

Select a demo scenario or enter your own data:

E-commerce

Digital ad campaign for an online retailer

SaaS

Subscription business with recurring revenue

CPG Brand

Consumer packaged goods with retail distribution

Step 1: Campaign Testing Data

Test vs. Control Methodology: This approach compares performance between a group exposed to your ads (test group) and a similar group that wasn't shown your ads (control group). The difference reveals the true incremental impact of your campaign.

Number of people exposed to the campaign
Number of people in the holdout group
%
Control group percentage will be calculated when you enter group sizes.
USD
Revenue generated from the campaign group
USD
Revenue from the holdout group that did not see the ad
Understanding Test vs. Control Methodology

How Test vs. Control Works:

The test vs. control methodology is considered the gold standard for measuring true incrementality. Here's how it works:

  1. Audience Division: Your total audience is divided into two groups: the test group (exposed to ads) and control group (not exposed to ads).
  2. Random Assignment: People are randomly assigned to ensure the groups are statistically similar.
  3. Measure Difference: Any difference in performance between the two groups can be attributed to the campaign.
  4. Scale Results: The observed difference is then scaled based on the control group percentage to estimate total impact.

Example Calculation:

If your control group is 10% of your audience and shows $10,000 in revenue, while your test group (90%) shows $100,000, the incremental impact calculation would be:

Test Group Revenue (normalized to 100%): $100,000 ÷ 90% = $111,111
Control Group Revenue (normalized to 100%): $10,000 ÷ 10% = $100,000
Incremental Revenue: $111,111 - $100,000 = $11,111

Step 2: Costs & Customer Acquisition

USD
Include only the extra variable costs that occur as a direct result of the incremental sales
Understanding Variable Costs

What Counts as Variable Costs:

Variable costs are expenses that change directly with the volume of sales. For incrementality analysis, you should only include costs that are directly tied to the additional sales generated by your campaign:

Include:

  • Cost of goods sold (COGS) for additional units
  • Shipping and fulfillment for additional orders
  • Payment processing fees for additional transactions
  • Commissions on additional sales
  • Variable customer support costs for new customers

Do NOT Include:

  • Fixed costs like rent, salaries, or software subscriptions
  • Marketing campaign costs (these are entered separately)
  • Overhead costs that don't change with sales volume

Common mistake: Don't use your average margin percentage to calculate variable costs for incrementality. Instead, identify the specific additional costs incurred due to the incremental sales.

USD
The total cost of executing your marketing campaign
The count of new customers attributed to this campaign

Step 3: Customer Lifetime Value

Choose a time horizon that aligns with your business model and customer lifecycle.
USD
This is your Gross CLTV—the top-line revenue per customer
USD
Used to calculate Net CLTV—the actual profit per customer
Understanding Customer Lifetime Value (CLTV)

Key CLTV Concepts:

  • Gross CLTV: The total revenue generated by a customer over their lifetime before any costs are subtracted.
  • Net CLTV (before CAC): The customer value after subtracting variable costs but before acquisition costs.
  • Profit per Customer: Net CLTV minus the Cost of Acquisition (CAC).
  • CLTV:CAC Ratio: The ratio of Net CLTV (before CAC) to Customer Acquisition Cost. This shows how many times your marketing spend is covered by customer value. A healthy business typically maintains at least a 3:1 ratio.

The proper CLTV:CAC calculation:

CLTV:CAC Ratio = Net CLTV (before CAC) ÷ CAC

For example, if a customer generates $300 in net value (after variable costs) and costs $100 to acquire:

CLTV:CAC Ratio = $300 ÷ $100 = 3:1

This means you're generating 3× your acquisition cost in value per customer.

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