Margin Analysis
Margin Collision
Definition
When multiple cost factors simultaneously erode margin on a single order — e.g., a deep discount, high freight zone, and unfavorable FX rate combining to make an order unprofitable.
By Herzel MishelFounder, AgentisLast reviewed
A margin collision occurs when multiple cost-increasing factors converge on a single order, pushing it below profitability even when each individual factor seems manageable. For example: a 20% promotional discount applied to a product with recently increased COGS, shipping to a high-cost freight zone (e.g., Alaska or Hawaii), during a period of unfavorable FX rates on imported components. Each factor alone might be within acceptable range, but their combination creates an unprofitable order. Margin collisions are particularly dangerous because they’re invisible to any single system — the discount engine doesn’t see freight costs, the shipping calculator doesn’t see COGS changes, and the FX system doesn’t see applied promotions.
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Related Terms
Margin Analysis
Checkout Margin Erosion
The loss of profit margin that happens when an order is priced at checkout, caused by unmonitored discount stacking, freight cost miscalculation, FX fluctuations, and stale COGS data.
Profit Governance
Profit Floor
The minimum margin an order must clear after discounts, COGS, freight, fees, and FX are counted. Orders that fall below the profit floor are flagged for review or automatically held before they ship.
Cost Management
Landed Cost
The total cost of a product delivered to the customer, including COGS, freight, duties, tariffs, insurance, and handling fees.
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