allowable order cost

Amount that can be spent on persuading a prospect or customer to make a purchase, without eroding the desired profit margin. The lifetime value of the customer may be considered in determining the allowable order cost, or the marketer may simply look at the expected revenue from a single order. To be truly accurate, all costs and all revenues over the customer lifetime should be considered in the equation. For example, a magazine publisher designing a promotion to sell first-time subscribers should consider not only the revenue for this subscription, but also future renewal revenue and ancillary sales revenue as well as the costs of fulfilling the order, sending bill and renewal notices, and supplying product. A customer expected to renew a subscription several times at full price would be assigned a higher allowable order cost than one expected to respond only to highly discontinued offers.