Contribution Margin is the key metric that shows how much money remains from each sale after paying all the costs that only exist because that sale happened. In eCommerce, these variable costs typically include the product cost, marketplace commissions, payment processing fees, shipping (when subsidised), sales taxes, packaging and sometimes a proportional share of customer acquisition cost.
The formula is straightforward:
Contribution Margin (€) = Selling Price – Variable Costs
Contribution Margin (%) = (Selling Price – Variable Costs) ÷ Selling Price × 100
This number is critical because it answers a fundamental question: “Is this sale helping to pay rent, team, software and advertising, or is it draining cash?” Unlike traditional gross margin, contribution margin ignores fixed costs and focuses only on what each product or channel truly leaves in the business.
In eCommerce, a healthy contribution margin enables you to:
- Identify which products and channels (own site vs. marketplaces) are genuinely profitable
- Set discounts and coupons without destroying profitability
- Calculate the minimum ROAS required for ad campaigns to be profitable
- Decide whether free shipping or aggressive promotions are sustainable
Simply installing tracking tools or a metrics dashboard does not guarantee good margin management. You need to accurately map all variable costs by SKU and by channel, and review these numbers regularly — especially when marketplace fees, shipping rates or tax rules change.s taxas de marketplace, custos de transporte ou impostos.