FP&A
What Is Sensitivity Analysis?
Sensitivity analysis shows how your financial outcome changes when one input moves. Change AOV by 10 percent, CAC by 20 percent, or freight cost by five dollars, and the model tells you which variable kills the business fastest. Operators use it to stress-test a forecast before committing to ad spend or inventory.
Sensitivity Analysis flexes one variable at a time in your financial model to measure how much it moves the output. It tells you which operating levers matter most, and where to focus management attention.
How sensitivity analysis works
Pick one variable (e.g., paid CAC). Hold everything else constant. Run the model at -20%, -10%, base, +10%, +20%. Record the EBITDA / FCF / cash impact at each level. Repeat for the next variable.
Common levers to flex (DTC)
- Paid CAC: ±20%
- Conversion rate: ±10%
- AOV: ±10%
- Return rate: ±2 percentage points
- Repeat purchase rate: ±10%
- Landed cost / FX: ±10%
- FBA fee level: 0, +6%, +12%
- Marketing spend efficiency: ±15%
Example
A DTC brand runs sensitivity on its $3M EBITDA base case. CAC ±20% moves EBITDA from $1.8M to $4.2M (huge). AOV ±10% moves it $2.5M$3.5M (medium). Return rate ±2 points moves it $2.7M$3.3M (small). Conclusion: CAC dominates, every management hour spent on CAC is 46x more valuable than any other lever.
The most common mistake
Running sensitivity once and treating the rankings as permanent. The lever rankings shift as the business scales. CAC dominates at $5M ARR; at $30M ARR, retention lift may dominate. Refresh sensitivity quarterly alongside the forecast.
Frequently Asked Questions
sensitivity vs scenario planning?
Sensitivity = one variable at a time. Scenarios = multiple together.
what variables to flex first?
CAC, conversion rate, AOV, return rate. Then macro (FX, freight, fees).
how wide should flex range be?
±1020% typically.
Related Terms
- What is scenario planning?
- What is a driver-based forecast?
- What is variance analysis?
- What is 13-week cash flow?
Browse the full ecommerce finance glossary for every metric and money term a DTC operator needs.
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