What is a payout ratio, and why does it matter?
Quick answer
A payout ratio usually means total payouts to traders divided by revenue over a period. It shows how much of each dollar of sales goes back to traders. A rising payout ratio is an early warning that pricing, rules or trader behaviour need attention before the business becomes unprofitable.
Detailed answer
How to use it:
- Calculate monthly: payouts paid ÷ challenge and add-on revenue in the same month.
- Watch the trend: a steady increase matters more than one high month.
- Investigate spikes: look for clusters of similar trades, copy trading, or a promotion that brought in a different kind of trader.
- Compare with your model: the business plan assumed a ratio; check reality against it.
The ratio combines two independent things, how many traders pass and how much each funded trader earns, so look at both. Per-account data makes the analysis possible: PropExecutor's API returns each account's full report, including deals, profit, drawdown and status, which you can aggregate across your funded book.
Illustrative example
In a month with $40,000 of challenge revenue and $12,000 of payouts, the payout ratio is 30%. If next month's payouts rise to $22,000 on similar sales, the ratio jumps to 55%, a signal to investigate before it becomes a trend.
What a healthy ratio is
There is no universal figure; it depends on your other costs and margin. Set your own threshold from your financial model.
PropExecutor team · Updated
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