Measuring margin after failed payments and replacements

Calculate a subscription cycle’s contribution from the amount attributable to that cycle, less ordinary supply and exception costs. A failed charge attempt is not a collected payment. A free replacement remedies an earlier delivery; it is not another paid recurring order. Link each exception to its original cycle.

Build a cycle record

Give each scheduled delivery a reference linking its subscription, payment attempts, order, dispatch and any remedy. Record payment as pending, captured, refunded or uncollected at the report’s close date.

Keep an unresolved retry visible rather than assigning it a final outcome too early. For prepaid plans, state how the collected advance payment is allocated across promised deliveries for this management measure; keep the actual payment record separately.

Use amounts and costs on a consistent GST basis appropriate to the offer. For an ordinary parcel, include product, packaging, packing, delivery and payment costs assigned to the cycle. Add any extra retry costs actually incurred. A retry attempt is not another sale merely because the payment system records another attempt.

Cycle contribution = net amount attributable to the cycle − ordinary supply costs − additional payment-failure and remedy costs.

Cycle contribution margin = cycle contribution ÷ net amount attributable to the cycle × 100, when that amount is positive. If it is zero, report the cycle’s dollar cost or loss; the percentage is undefined.

Steps to Measure Margin After Failed Payments and Replacements

Resolve the payment outcome

Compare the scheduled charge with captured payments, later recovery and refunds. Reconcile the order and payment records rather than treating the two report totals as equal. One failed attempt followed by a successful retry produces one collected cycle under this measure.

If fulfilment is held until payment succeeds, an uncollected cycle may have incurred handling costs without ordinary parcel costs. If a parcel was sent before final payment, its product and delivery costs remain even if collection fails. Use the merchant’s actual hold rule and record when a later recovery or refund changes a closed-cycle result.

Assign remedies to the affected cycle

For a damaged or missing delivery, record whether the resolution was a whole box, a component, a refund or another remedy. Add replacement product, packing and postage costs to the original cycle. Record any confirmed carrier or supplier credit separately. The next regularly scheduled box belongs to its own cycle, even if it ships near the replacement.

Key Actions for Remedy Assignment to Affected Cycles

Check a hypothetical close

Suppose three fictional boxes are scheduled at $50 each. Two charges are ultimately captured; the third fails and its box is held.

Each supplied box costs $30 for ordinary contents and fulfilment. One supplied box needs a $12 replacement. Across the three cycles, the business incurs $2 of additional retry costs. Assume no refunds or other costs, and a consistent tax basis.

The attributable amount is $100. Ordinary supply costs are $60, replacement cost is $12 and extra retry costs are $2. Contribution is $26, or 26% of $100. The held, uncollected cycle remains visible in the exception count. These invented figures illustrate the calculation, not a typical price or margin.

Set a payment and remedy cut-off for each report. If a recovery, refund, replacement or credit arrives later, apply a documented adjustment rule so period comparisons remain consistent. Cycle contribution is a management measure; it does not determine accounting revenue recognition or overall business profit.