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Contribution Margin Calculator
See true profit after every variable cost — and what's left for ads.
Your numbers
Revenue and every variable cost for the period.
$
$
Cost of goods
$
$
$
$
$
$
Contribution margin
$28,100.0028.1%
Profit / order
$14.05
Break-even ad spend
$46,100.00
contribution before adsTrack contribution margin live
Connect your store and ad accounts and the Captain calculates contribution margin per product and channel, automatically.
How it’s calculated
Contribution profit = Revenue − variable costs (COGS + shipping + fees + discounts + returns + ads)
Contribution margin = Contribution profit ÷ Revenue × 100.
Worked example
- Revenue
- $100,000
- Variable costs
- $71,900
- Orders
- 2,000
- Result
- Contribution profit $28,100 → 28.1% margin
That's $14.05 per order, with up to $46,100 of ad spend before contribution hits zero.
What your result means
Contribution margin is what each sale contributes toward fixed costs and profit, after the costs that scale with volume. It's more honest than gross margin because it includes fees, shipping, discounts, returns and ads. Watch it per product — some ‘bestsellers’ contribute little once every variable cost is in.
Common mistakes
- Treating fixed costs (rent, salaries, software) as variable — they don't belong here.
- Forgetting discounts and returns, which quietly erode contribution.
- Reading a healthy gross margin as a healthy contribution margin — ads and fees can close the gap.
Learn how it works
9 min guide
The Complete Guide to E-commerce Profitability
Revenue is vanity; profit is sanity. Walk the profit ladder — gross, contribution and net — learn which costs belong where, how discounts, shipping and returns bite, and how to find the numbers that tell you if you're actually making money.
5 min guide
Gross Margin vs Contribution Margin vs Net Margin
Three margins, three jobs. Learn what gross, contribution and net margin each measure, the formula for each, and which one to use for pricing, product decisions and judging the whole business.
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Frequently asked questions
Contribution margin vs. gross margin?
Gross margin only subtracts cost of goods; contribution margin subtracts all variable costs (fees, shipping, discounts, returns, ads). Contribution is the truer read on whether volume pays off.
What's a good contribution margin?
It varies by model, but many e-commerce brands aim for 20–40%. The key is that it comfortably covers your fixed costs at your sales volume.
Last reviewed 31 Jul 2026 · reviewed by the Dash Captain team.