Revenue net of treatment cost#
Incremental revenue from a treatment after subtracting its cost.
Important
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What it is#
Revenue net of treatment cost is the extra revenue a treatment earns after subtracting the cost of running it. It answers the blunt question: after paying for the campaign, how much incremental revenue did we really keep?
The formula#
where incremental revenue is treatment-group revenue minus control-group revenue, and treatment cost covers marketing spend, incentives, delivery fees — any direct cost of the treatment.
A worked example#
An email upsell campaign brings the treatment group to $120,000 in revenue against the control’s
$100,000 — an incremental revenue of $20,000. If the campaign cost $5,000 to run, then net
revenue is $15,000 — the $20,000 of incremental revenue minus the $5,000 cost. The
headline $20K uplift is really ``$15K`` once costs are counted.
Why it matters#
Uplift measured on revenue alone overstates the benefit. Net revenue sits closer to ROI (though ROI further accounts for profit margin) and is the right lens for comparing campaigns: two treatments with equal uplift are not equal if one costs far less to run.
Theme: Causal Inference & Uplift · All terminology
Hint
Mind map — connected ideas
Incremental Revenue · Treatment Cost · ROI (Return on Investment) · Incremental Conversions · Conversion Rate Uplift · Gross Margin
Hint
More in Causal Inference & Uplift
AUUC (Area Under the Uplift Curve) · Causal Effect · Causal Impact · Causal Inference · Causal ML (Causal Machine Learning) · Causal Trees · Cumulative Incremental Gain (CIG) · Cumulative Uplift · Incremental Conversions · Incremental Gain · Incremental Recovery Rate (IRR) · Incremental Revenue · Incremental Sales · Qini Coefficient
See also
Source article Adapted (context, re-expressed) in our own words from: Revenue net of treatment cost (insightful-data-lab.com).