Home / Our Methodology / The Leakage Model
Methodology M.01The Leakage Model, annotated
One equation drives every audit we run. Here is each term, what feeds it, and the arithmetic worked end to end on a hypothetical campus — so you can check the math before you ever send us a contract.
Five terms, one output
What each input means and where it comes from
Benchmark commission rate
The commission rate institutions comparable to yours are receiving today — drawn from your rule-constructed peer set, weighted by enrollment band, institution type, and store model.
Sourced from: peer-set analysis built on IPEDS characteristics, NACS sector data, and public contract disclosures. See Benchmarks & Data Sources.
Contracted commission rate
Your effective rate as actually written — the base rate adjusted for tiered breakpoints and category carve-outs, which routinely make the effective rate lower than the headline rate on page one.
Sourced from: your executed agreement and amendments; verified against your most recent commission statement.
Gross store revenue
Total bookstore sales across all channels the contract governs — physical, online, and digital course materials. The multiplier that converts a rate gap into dollars.
Sourced from: operator statements and institutional figures; cross-checked against enrollment-based sector expectations for reasonableness.
Digital displacement gap
Revenue that moved from commissionable physical sales into digital channels — Inclusive Access, First Day Complete, courseware — credited at lower rates or excluded entirely under contract language written before those channels mattered. The fastest-growing term in most audits.
Sourced from: your contract's digital-revenue definitions applied against statement-level channel data.
Unenforced MAG shortfall
The gap between what the Minimum Annual Guarantee entitles you to and what was actually paid — including guarantees quietly reduced by reset triggers tied to enrollment or renovation clauses.
Sourced from: MAG provisions and reset history in your agreement, reconciled against payment records.
The arithmetic, end to end
A hypothetical private institution: 3,400 students, an outsourced store grossing $1.42M, a contract signed nine years ago at 8.0% effective commission.
The rate-gap term: (11.2% − 8.0%) × $1.42M = $45.4K. The digital displacement analysis finds $22.8K credited below the physical rate or excluded. MAG reconciliation surfaces $18.0K in unenforced shortfall. Total: $86.2K per year — every figure traceable to a contract clause, a statement line, or a named benchmark.
In a real engagement each term also carries a conservative–favorable band, and the finding is stated at the conservative end. A number you might beat is credible; a number you might miss is marketing.
Hypothetical institution; illustrative figures, not a client result and not a promise of yours.
What the model does not claim
It is not a recovery guarantee
Leakage is what the contract and benchmarks say you're not receiving. Recovering it depends on negotiation, clause rights, and decisions that belong to your institution.
An estimate is not a finding
The self-assessment's indicative range and this page's hypothetical are illustrations. A finding exists only after the audit runs your actual contract and statements.
It does not assume every campus leaks
Some contracts benchmark clean. When yours does, the finding says so — and under the Discovery pilot, that finding costs you nothing.
It is not precise to the dollar
Findings are stated as conservative-end figures with disclosed bands. False precision is its own kind of dishonesty, and we don't practice it.