Contribution Margin Calculator
See what remains after COGS, fulfillment, fees, marketing, returns, and every other variable cost.
Enter your period totals
Use one consistent period and avoid counting returns or discounts twice.
Net sales for the period
Product and production costs
Pick, pack, and merchant-paid delivery
Card and transaction fees
Acquisition spend that scales with sales
Refunds, returns, and discounts not already netted from revenue
Commissions, packaging, or other per-order costs
Your contribution margin
Contribution margin
$35,000.00
35.0% of revenue
- Total variable costs
- $65,000.00
- Variable cost ratio
- 65.0%
- Remaining from each $1 of revenue
- $0.35
What this means
Your sales contribute toward fixed costs, but growth decisions still need close cost controls.
Contribution-margin definitions vary. Decide which costs are variable for your business, document the policy, and apply it consistently.
How to calculate contribution margin
Contribution margin is the revenue left after subtracting costs that change with sales volume. It is the amount available to cover fixed costs and, after those are paid, create profit.
Contribution margin = Revenue - Total variable costs
Contribution margin ratio = Contribution margin / Revenue x 100
For $100,000 in revenue and $65,000 in total variable costs, contribution margin is $35,000. The contribution margin ratio is 35%, so $0.35 of each revenue dollar remains for fixed costs and profit.
Which ecommerce costs should you include?
| Cost | How to treat it |
|---|---|
| COGS | Include product, manufacturing, packaging, and other unit costs. |
| Fulfillment and shipping | Include pick-and-pack and merchant-paid outbound delivery when they vary with orders. |
| Payment fees | Include transaction fees that rise with sales. |
| Marketing | Include performance spend when your internal definition treats it as variable; keep brand or fixed retainers separate. |
| Returns and discounts | Include them only if they have not already reduced the revenue input. |
There is no universal cost policy. Outbound shipping and marketing are common judgment calls. The useful definition is the one your team documents and applies consistently across periods, products, and cohorts.
How to interpret and improve your result
A positive contribution margin means sales help pay fixed costs. A negative contribution margin means selling more under the same economics increases the loss. Compare your percentage with similar stores on Amp's contribution margin benchmark, but prioritize a consistent trend over a generic target.
Improve product economics
Raise prices where willingness to pay supports it, negotiate product costs, reduce packaging weight, and shift merchandising toward higher-contribution SKUs or bundles.
Control variable acquisition costs
Set channel and campaign targets against contribution margin rather than revenue alone. A campaign can report an attractive ROAS while leaving too little after COGS, fulfillment, fees, and returns.
Reduce fulfillment and returns leakage
Compare carriers, packaging, 3PL fees, return reasons, and discount depth. Small per-order savings compound directly into contribution margin.
Use the break-even calculator to translate margin into the sales volume required to cover fixed costs, or read the complete contribution margin guide.
Contribution margin vs gross margin
Gross margin subtracts COGS. Contribution margin subtracts all costs classified as variable, so it usually sits below gross margin and gives operators a more practical guardrail for pricing and growth. See the full contribution margin vs gross margin comparison or calculate product economics with the profit margin calculator.
Lifetimely by Amp connects revenue, COGS, shipping, transaction fees, and marketing data so you can monitor contribution margin without maintaining a spreadsheet.
Explore Lifetimely profit analyticsFrequently asked questions
What is contribution margin?
Contribution margin is revenue minus variable costs. It shows how much revenue remains to cover fixed costs and profit after costs that change with sales volume, such as COGS, fulfillment, payment fees, and variable acquisition spend.
What is the contribution margin formula?
Contribution margin = revenue - total variable costs. Contribution margin ratio = contribution margin / revenue x 100. For $100,000 of revenue and $65,000 of variable costs, contribution margin is $35,000 and the contribution margin ratio is 35%.
What counts as a variable cost in ecommerce?
Typical ecommerce variable costs include COGS, pick-and-pack fees, outbound shipping paid by the merchant, payment processing, returns, discounts, and performance marketing that scales with orders. Cost classification varies by company, so document your definition and use it consistently.
What is a good contribution margin for ecommerce?
A good contribution margin depends on category, growth stage, customer mix, and which costs your company classifies as variable. Compare your result with similar brands, then track it consistently by product, customer cohort, and period rather than relying on one universal target.
How is contribution margin different from gross margin?
Gross margin subtracts COGS from revenue. Contribution margin goes further by subtracting every cost your company defines as variable, which can include fulfillment, payment fees, returns, and variable marketing. Contribution margin is therefore usually lower and more useful for short-term growth decisions.