Do Lost Sales Add Value?

In retail software, the phrase “lost sales” is everywhere. Most tools focus on calculating the revenue a company could have made if products had been in stock. The formula is usually simple:

Expected sales over a period – Actual sales = Lost sales

At first glance, that seems straightforward. But there is a problem. The entire formula depends on expected sales — which comes from a demand forecast. Even a good forecast is typically 80–90% accurate. That means your expected sales number could be wrong by as much as 20% before you even begin calculating lost sales. That’s a huge margin of error.

But there’s another issue.

Let’s say we could magically calculate lost sales with 99% accuracy. What could you actually do with that number? Time has already passed. Customers bought something else or went to another store. The sale is gone. So is the number useful? In most cases, not really.

A customer walking a retail store with empty shelves.

Think about it another way.

When you were younger and started receiving birthday money, did you invest it? Or did you spend it on a toy? Theoretically, there was an optimal financial decision. And chances are, you weren’t investing in the S&P 500 when you were eight years old. Today, you could calculate what that money might be worth if it had been invested perfectly. But what would be the point? You can’t go back and change that decision.

What matters is what you learned afterward. Over time, you likely became more thoughtful with money. You learned to save, invest, and make better financial decisions.

The past didn’t change — but your future decisions did. That’s the way lost sales should be used. Not to estimate a theoretical number, but to recognize that they happened and learn from them.

At INVIS Solutions, we don’t focus on calculating how much revenue you already lost.

Instead, we focus on helping you make better decisions today so you can avoid those losses tomorrow.

Because the past can inform you.

But only the present can improve your future.