Breakage

Breakage is a term used in telecommunications and accounting to indicate any type of service which is unused by the customer. A good example would be gift cards or calling cards that have been sold but never redeemed. Revenue from breakage is almost entirely profitable, since companies need not provide any goods or services for unredeemed gift cards. It should not be confused with Shrinkage (accounting) (items which are not used by the customer because they disappeared from inventory). Breakage is a term used in telecommunications and accounting to indicate any type of service which is unused by the customer. A good example would be gift cards or calling cards that have been sold but never redeemed. Revenue from breakage is almost entirely profitable, since companies need not provide any goods or services for unredeemed gift cards. It should not be confused with Shrinkage (accounting) (items which are not used by the customer because they disappeared from inventory). In 2006, a blog called 'The Stalwart' criticized Best Buy for using estimated breakage to improve their revenue numbers.