Definition
Contribution margin subtracts COGS, shipping, payment fees and per-order costs from revenue. It is the honest unit number break-even math runs on - ROAS targets and discount ceilings all derive from it.
Why it matters
Businesses scaling on revenue while contribution margin stays negative are buying their own growth - the correction is always expensive later.
Formula
(Revenue - Variable costs) / Revenue
Benchmarks
Know it to the percentage point; recompute quarterly
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