What is a good contribution margin for ecommerce?

There is no single benchmark, and any range you see quoted online ignores the things that actually decide it: your category, price point, AOV, shipping model, return rate and how much of your growth is paid. A low-price, heavy, high-return product can be healthy at a margin that would be alarming for a light, high-AOV one. The useful test is internal: is your contribution margin high enough to cover your fixed costs at your current order volume, and is it improving over time?

What counts as a variable cost?

Anything that only occurs because an order happened: product cost, inbound duty, pick and pack, shipping, packaging and handling, payment processing fees, per-order app fees, and advertising when you include it.

Is contribution margin the same as gross margin?

No. Gross margin usually only subtracts the cost of goods. Contribution margin subtracts every variable cost, which is why it is much closer to the money you actually keep.

Should advertising be part of contribution margin?

Both views are useful. Before advertising it tells you how much room you have to buy customers; after advertising it tells you what the order actually contributed. Always be explicit about which one you are quoting — this calculator shows both.

Contribution Margin Calculator

Contribution margin is what one sale leaves behind after every variable cost. Enter the price your customer pays and your per-order costs to see contribution in euros and as a percentage, before and after advertising.

Selling price

€

Price includes VAT?

VAT / sales tax rate

€79.00 including 21% VAT = €65.29 net revenue.

COGS

€

Shipping

€

Packaging & handling

€

Other variable costs

€

Per-order app fees, inserts, returns provision.

Average payment fee

Your average effective transaction rate.

Average fixed payment fee

€

Payment cost: €1.44 per order.

Payment fees vary by payment method, Shopify plan, country, card type and payment provider. Use your average effective transaction fee for the most realistic estimate.

Advertising per order (optional)

€

Leave at 0 to see the margin before advertising only.

52.3%

Contribution margin before advertising

Before advertising, €0.52 of every €1 in net revenue remains available for acquisition and contribution profit.

Net revenue per order: €65.29
Variable costs per order: €31.13
Contribution before advertising: €34.15
Contribution profit after advertising: €34.15
Contribution margin after advertising: 52.3%

How we calculated this

Selling price incl. VAT: €79.00
VAT: − €13.71
Net revenue: €65.29
COGS: − €24.00
Shipping: − €4.50
Packaging & handling: − €1.20
Payment fees: − €1.44
Other variable costs: − €0.00
Contribution before advertising: €34.15

Payment fees are charged on the full amount collected from the customer, VAT included. Fixed costs such as salaries, rent and software are not part of this calculation.

What is contribution margin?

Contribution margin is the money a sale contributes toward fixed costs and profit. It is the cleanest measure of whether a product is worth selling, because it strips out everything that would not have happened without the order — including VAT, which belongs to the tax authority rather than to your store.

How is contribution margin calculated?

Net revenue = selling price − VAT (when the price includes it)

Contribution before advertising = net revenue − COGS − shipping − packaging − payment fees − other variable costs

Contribution margin % = contribution ÷ net revenue × 100

Subtracting advertising or customer acquisition cost from the contribution before advertising gives contribution profit.

Example

A €79.00 product including 21% VAT leaves €65.29 of net revenue. With €24.00 COGS, €4.50 shipping, €1.20 packaging and €1.44 of payment fees, contribution before advertising is €34.15 — a 52.3% margin. At €20.00 of advertising per order, contribution profit falls to €14.15, a 21.7% contribution margin.

Why this matters for ecommerce stores

Contribution margin determines everything downstream: your break-even ROAS, the most you can pay per order, and whether a discount is affordable. Stores that track only revenue and gross margin routinely discover the difference too late. Rather than comparing yourself with a published benchmark, compare your margin with your own fixed cost base and with last month.

Frequently asked questions

What is a good contribution margin for ecommerce?: There is no single benchmark, and any range you see quoted online ignores the things that actually decide it: your category, price point, AOV, shipping model, return rate and how much of your growth is paid. A low-price, heavy, high-return product can be healthy at a margin that would be alarming for a light, high-AOV one. The useful test is internal: is your contribution margin high enough to cover your fixed costs at your current order volume, and is it improving over time?
What counts as a variable cost?: Anything that only occurs because an order happened: product cost, inbound duty, pick and pack, shipping, packaging and handling, payment processing fees, per-order app fees, and advertising when you include it.
Is contribution margin the same as gross margin?: No. Gross margin usually only subtracts the cost of goods. Contribution margin subtracts every variable cost, which is why it is much closer to the money you actually keep.
Should advertising be part of contribution margin?: Both views are useful. Before advertising it tells you how much room you have to buy customers; after advertising it tells you what the order actually contributed. Always be explicit about which one you are quoting — this calculator shows both.

Know your actual contribution margin.

Connect Shopify to automatically calculate your margin using your real orders, product costs and operating assumptions.

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What Is a Good Ecommerce Profit Margin? — Understand gross margin, contribution margin and net profit — and why there isn't one “good” margin for every ecommerce brand.

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