Lost Sales Value

Lost sales value estimates revenue that would have occurred without an availability failure but did not occur. It is a counterfactual quantity: recorded sales do not show every purchase a customer might have made. A delayed shipment is not automatically a permanently lost sale.

Assume ten unavailable units would each have sold for 20 currency units, with no later purchase or substitution. Under those assumptions, estimated lost revenue is 10 × 20 = 200 currency units. If six are bought later, the same 200 cannot be treated as permanent lost revenue. Profit impact additionally depends on costs and margins.

Explain how demand is estimated, the observation horizon, expected price, and treatment of cancellations and substitution. Shopify’s Stocky app, retired after August 31, 2026, is one example: it estimated lost revenue by applying the average sales rate over a selected sample period. Such an estimate can be useful, but seasonality, promotions, and censored demand can make that rate unrepresentative.

Examples and calculations here are illustrative.

References:

• Shopify Help Center, Stocky low-stock reporting