GMV & Margin Graph

As a platform you may usually have a high GMV (General Merchandise Value, ie. the full absolute payment amount in currency made through it, eg. a 100$ for a night at an Airbnb), compared to ultra-thin margins (the service fee that Airbnb gets minus payment processing fees). Even though there is this huge discrepancy between your GMV and your net revenue (the dollar amount you actually take home), it should be the case that when your GMV goes up, so does your net revenue. But we often see that not being the case. And this graph shines a light on it.

On the 6th of July we had a spike in GMV to about €200,000 but a dip in margin. Why is that?

GMV, on the left Y-axis in absolute amounts, shines a light on your revenue potential, while the margin percentage on the right Y-axis has the answer to how much the platform has out of that potential.

While GMV can fluctuate due to various reasons, expected ones, like seasonality being part of the equation, margins ideally do not. In fact, steady margins are hallmarks of a healthy platform.

Exploring the graph above, we can see that on the 6th of July we had a spike in GMV to almost €200,000 but a dip in margin. The first point to note here is that we had an opportunity to net more revenue due to increased GMV but we didn’t.

Why is that?

The answer lies in a platform’s pricing strategy and the way their ability to account for the different processing fees associated with the payment methods used by their customers. Platforms with a flat fee for all of their payments, regardless of whether it was processed via Visa or AMEX for example, will see their platform experience volatile margins, that can end up hurting their business.

With Revenew you can not only dive into these intricacies at the most granular level, but also control the way that your margins should behave amidst seemingly unpredictable payment method pairs (also taking cross-border fx and card types into account).

We’re leaving you with a video walkthrough of the graphs, let us know any feedback or thoughts and please just reach out if this is the level of insight you’ve always looked for. We’re happy to give you a tour and get you into our dashboard in less than a minute.

Watch the loom video for a walkthrough.