Margin Collision

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.