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1. Re: Profit Chart ?
Denny WongOracle Aug 24, 2012 9:26 AM (in response to 769738)How to compute Profit:
Assume Quantile = 20 (I just pick quantile = 20 for this example)
Targets Cumulative at Quantile 20 = 18 (this value can be found in the lift chart/data)
Non Targets Cumulative at Quantile 20 = 2 (this value can be found in the lift chart/data)
Total Targets = 100 (Targets Cumulative at last Quantile + Non Targets Cumulative at last Quantile)
Startup Cost = 1000 (user input)
Incremental Revenue = 10 (user input)
Incremental Cost = 5 (user input)
Budget = 10000 (user input)
Population = 2000 (user input)
Profit = 1 * Startup Cost + (Incremental Revenue * Targets Cumulative  Incremental Cost * (Targets Cumulative + Non Targets Cumulative)) * Population / Total Targets
Profit = 1 * 1000 + (10 * 18  5 * (18 + 2) * 2000 / 100 = 600
How to compute ROI:
ROI = ((profit  cost) / cost) * 100, where profit = Incremental Revenue * Targets Cumulative, cost = Incremental Cost * (Targets Cumulative + Non Targets Cumulative)
ROI = ((180  100) / 100) * 100 = 80
Hope this help! 
2. Re: Profit Chart ?
769738 Aug 26, 2012 11:03 PM (in response to Denny WongOracle)Thanks a lot dwong, Now I can calculate the profit and ROI.
One more thing, I'm a little bit confuse about definition of variables which is used for this calculation :
1. Startup cost : total startup cost (fixed cost)
2. Incremental revenue : estimated revenue that results from a sale or new customer.
3. Incremental Cost : estimated cost that results from a sale or new customer.
4. Budget : What does budget mean ? since the variable was not using for profit calculation+
5. Population : number of population/cases
is it right ?
What does it mean if we get profit $600 and ROI 80% in 2000 population (quantile 20). Can you explain a little bit about this ?
Many Thanks 
3. Re: Profit Chart ?
Denny WongOracle Aug 27, 2012 10:30 AM (in response to 769738)Hi Bayesian
Your variable definitions seem right. About the Incremental cost, you can think of it as a cost to promote a sale. For example, in a mail order campaign, it could be a cost to mail a catalog to a customer.
The budget is used to calculate how much population it can cover based on user supplied variables.
For example,
Startup Cost = 1000 (user input)
Incremental Revenue = 10 (user input)
Incremental Cost = 5 (user input)
Budget = 10000 (user input)
Population = 2000 (user input)
So each quantile contains 20 cases (total population / number of quantiles = 2000/100)
The cost to promote a sale in each quantile = $5 * 20 (Incremental Cost * number of cases per quantile) = $100
The cumulative costs of quantiles are:
Quantile Cost
1 $1100 ($100 + start up cost of $1000)
2 $1200
: :
20 $3000
: :
90 $10000
: :
100 $11000
The $10000 budget can covers the first 90 quantiles of population (you should see the budget line drawn in the profit chart on the 90th quantile).
Question: What does it mean if we get profit $600 and ROI 80% in 2000 population (quantile 20). Can you explain a little bit about this ?
Answer: Use the mail order campaign as an example, it means if you mail catalogs to first 20 quantiles of population (400), it will generate a profit of $600 (which has ROI of 80%).
If you randomly mail the catalogs to first 20 quantiles of customers (Targets Cumulative = 10, Non Targets Cumulative = 10), the profit you get would be:
Profit = 1 * Startup Cost + (Incremental Revenue * Targets Cumulative  Incremental Cost * (Targets Cumulative + Non Targets Cumulative)) * Population / Total Targets
Profit = 1 * 1000 + (10 * 10  5 * (10 + 10)) * 2000 / 100 = $1000 (no profit)
Hope this help! 
4. Re: Profit Chart ?
769738 Aug 30, 2012 11:12 PM (in response to Denny WongOracle)Thanks dwong you're very helpful