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

An icon redesign on one of the app's bottom-tab icons is being tested across a product with 2,000,000 monthly active users and an average revenue per user (ARPU) of $8.00/month...