Contribution Margin Calculator
What does each order leave after variable costs?
See what each order actually leaves you — after product costs (COGS), shipping, payment fees, returns, and the ad spend that won the order.
Your per-order costs
How to use this calculator
Example numbers · Contribution Margin / Order
$24.03Healthy
Per-order contribution
Contribution Margin / Order
Verdict
Healthy
$24.03
What's left from each order after variable costs — product cost, shipping, fees, returns and ad spend — or 28.3% of the order's value.
What we’d check next
We’d compare this with fixed costs next to see how many orders cover the month. Find the monthly break-even →
View chart and context
Where the order goes
- COGS$30.00
- Ad Spend / Order$12.00
- Return Cost$8.50
- Shipping$8.00
- Payment Fee$2.47
Values update as you type.
How you stack up
Global D2C planning band. Targets vary by vertical — apparel 30-45%, beauty 40-55%, food and beverage 20-30%, electronics 15-25%. Benchmarks are directional, not a guarantee; use them as a comparison point alongside your own historical data.
You vs. the planning band
Your Contribution Margin
28.3%
Planning band
A chosen anchor, not measured
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How we calculate what each order contributes after all variable costs. This page reports the after-ad-spend figure (sometimes called CM3): the Profit Margin calculator stops at product costs, shipping and fees, and the Break-Even calculator uses price minus variable cost per unit, so all three are correct and all three differ.
AOV − COGS − Shipping − Payment Fee − Return Cost − Ad SpendExample: $85 − $30 − $8 − $2.47 − $8.50 − $12 = $24.03
(Contribution Margin ÷ AOV) × 100Example: ($24.03 ÷ $85) × 100 = 28.3%
AOV × Payment Fee %Example: $85 × 2.9% = $2.47
AOV × Revenue Lost to Returns %Example: $85 × 10% = $8.50 — assumes returned goods are not resold
More things we’d check
Each order leaves $24.03 after the variable costs entered. We’d compare that with fixed costs next.
Find the monthly break-evenWe’d check shipping, payment fees and returns against actual orders.
We’d compare products separately before putting more ad spend behind them.
About contribution margin
What is contribution margin?
Contribution margin is what one order leaves you after every cost that comes with it: the product, shipping, payment fees, returns and the ads that won the sale. That money is what pays your fixed costs, and whatever is left after those is profit. It is the clearest single check on whether growing your sales will grow your profit too.
Formula
Contribution margin = order value − product cost − shipping − fees − returns − ad spend
A worked example
- An order is worth $85. The product costs $30 and shipping $8.
- The 2.9% payment fee is $2.47, a 10% return rate costs $8.50 an order, and ads cost $12 per order.
- $85 − $60.97 = $24.03 per order.
- $24.03 ÷ $85 = 28.3%, which lands in Healthy on the ladder.
What’s a good contribution margin?
Enough to cover your fixed costs at a sales volume you can actually reach. Below zero, every extra order loses more money. This is the ladder our calculators grade against:
- Below 0%
- Negative. Each sale costs more than it brings in, so selling more loses more.
- 0–20%
- Thin. Very little left to cover fixed costs. Scale carefully and prioritize cost reduction.
- 20–35%
- Healthy. Covers fixed costs at achievable volume. Improve margins before aggressive scaling.
- 35%+
- Strong. Low break-even point and high resilience to cost increases.
Contribution margin vs gross margin
- Gross margin only takes off product costs. The same order has a 64.7% gross margin, which makes it look far healthier than it is.
- Contribution margin takes off everything the order itself costs, ads included. It is the one to scale on.
- Net margin also takes off fixed costs like rent and salaries, spread across your orders. See your net margin with the profit margin calculator
- Break-even is how many of these orders it takes to cover your fixed costs. Count the sales you need with the break-even calculator
Frequently asked questions
Common questions about contribution margin and unit economics
Learn these key metrics
The profit earned on each unit sold after deducting all variable costs....
The average dollar amount customers spend per order/transaction....
Percentage of orders resulting in returns. Industry averages range from 15-30% f...
The total cost of acquiring a new paying customer, including all marketing and s...
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Keep going
Profit Margin Calculator
Layer in fixed costs to see full profitability per sale.
Calculate full profit marginBreak-Even Calculator
Find exactly how many units you need to cover fixed costs.
Find your break-even pointConversion & AOV Calculator
A bigger order spreads shipping and fees thinner. Model the lift.
Model a higher order valueRead the guide: How to calculate your break-even ROAS
FOUND YOUR NUMBER
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Know exactly which costs to cut and which fix adds the most profit to every order. Bring us your numbers and we'll show you. Free strategy call — no pitch, just clarity.
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7.7x blended return at scale — seven figures attributed, across five straight quarters · Modern Prairie · Apr 2025–Jun 2026 Read the Modern Prairie case study
