Seller economics / contribution margin
Contribution margin, one order at a time.
Separate the costs that move with a sale from the fixed costs you carry every month.
Updated September 1, 2026 · Illustrative education, not accounting or tax advice.
What contribution margin measures
Contribution margin is the money left after variable costs. For an ecommerce order, start with revenue, then subtract product cost, fulfillment, payment or marketplace fees, expected return loss, and other costs that move with the order.
The formula
Contribution margin = revenue − variable costs
Contribution margin rate is contribution margin divided by revenue. It is a decision input, not a universal “good” target.
Put it to work
Enter the same assumptions in the ecommerce profit calculator. Then test a higher return allowance, different shipping cost, and an ad-spend ceiling. For the advertising threshold itself, continue to the break-even ROAS calculator.
Keep these limits visible
- Contribution margin is not payout reconciliation.
- Expected return loss should be checked against your own cohorts.
- Taxes, cash timing, and one-time launch costs may sit outside this model.