E-commerce Glossary

Contribution Margin

Margin after deducting all variable costs per order.

Contribution Margin subtracts all variable costs from the selling price: COGS, shipping fees, payment commissions, platform fees. Formula: CM = Selling Price - Variable Costs. On a $100 order with $60 in variable costs, the CM is $40 (40%). This is the margin left to cover fixed costs and generate profit. It's the key metric for evaluating unit-level profitability.

Related terms

AOV (Average Order Value)Average amount spent per order in your store.See definition ARPU (Average Revenue Per User)Average revenue generated per user over a given period.See definition Blended CACAverage acquisition cost including all marketing channels.See definition Blended ROASOverall return on all advertising spend combined.See definition CAC (Customer Acquisition Cost)Total cost to acquire a new customer.See definition Churn RatePercentage of customers lost over a given period.See definition

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