Setting the Non-Inferiority Margin: A Worked Example

Every article so far in this series has treated the non-inferiority margin $\delta$ as a given number. It never is one in practice. Picking$\delta$ is the single hardest, least standardized step in the whole exercise — and it's a business decision dressed up as a statistical one. This article works through picking a real margin for a real revenue guardrail, start to finish, including the point where the business's first answer turns out to be statistically unaffordable.

The Setup

A checkout redesign is being tested across a product with 2,000,000 monthly active users and an average revenue per user (ARPU) of $8.00/month...