Contribution margin
What each sale contributes toward fixed costs and profit, once the costs of making and selling it are covered.
What each sale contributes toward fixed costs and profit, once the costs of making and selling it are covered.
What it is
Contribution margin is what is left from a sale after the variable costs of that sale: the product, shipping, payment fees and the ad spend it took to win it. It is the money each order contributes toward rent, salaries, software and, eventually, profit.
Contribution margin is what is left from a sale after the variable costs of that sale: the product, shipping, payment fees and the ad spend it took to win it. It is the money each order contributes toward rent, salaries, software and, eventually, profit.
Contribution margin is what is left from a sale after the variable costs of that sale: the product, shipping, payment fees and the ad spend it took to win it. It is the money each order contributes toward rent, salaries, software and, eventually, profit.
The formula
Contribution margin = Net sales − COGS − shipping − transaction fees − ad spend. As a rate: contribution margin ÷ net salesHow to read it
Use it to decide what to push and what to cut. A product with high revenue and a thin contribution margin can make the store busier without making it richer. Compare it by product and by campaign, not only for the whole store.
Use it to decide what to push and what to cut. A product with high revenue and a thin contribution margin can make the store busier without making it richer. Compare it by product and by campaign, not only for the whole store.
Use it to decide what to push and what to cut. A product with high revenue and a thin contribution margin can make the store busier without making it richer. Compare it by product and by campaign, not only for the whole store.
How Cifra shows it
Cifra shows contribution margin by product and by campaign in the product profitability report, with your Google Ads and Meta spend counted. Ask your AI assistant which products have the lowest contribution margin this month.
Cifra shows contribution margin by product and by campaign in the product profitability report, with your Google Ads and Meta spend counted. Ask your AI assistant which products have the lowest contribution margin this month.
Cifra shows contribution margin by product and by campaign in the product profitability report, with your Google Ads and Meta spend counted. Ask your AI assistant which products have the lowest contribution margin this month.