MarginStack

E-commerce Contribution Margin Calculator

What's really left per order after every fee, ad, and return — not the gross margin that hides them.

Selling price per order ($)

Product cost / COGS ($)

Marketplace / platform fee (%)

Payment processing fee (%)

Shipping / fulfillment ($)

Ad cost per order / CAC ($)

Return rate (%)

Contribution margin

20.3%

Contribution margin is what's left per order to cover fixed costs and profit. Re-run it per platform or country — fees, shipping, and returns all shift the number.

Contribution / order: $12.18
Total cost / order: $44.94
Return drag / order: $2.88

What you entered

Selling price per order ($): 60Product cost / COGS ($): 22Marketplace / platform fee (%): 12Payment processing fee (%): 2.9Shipping / fulfillment ($): 6Ad cost per order / CAC ($): 8Return rate (%): 8

1
Marketplace + payment fees
$60 × (12% + 2.9%)= $8.94
2
Total cost per order
$22 + $8.94 + $6 + $8= $44.94
3
Contribution before returns
$60 − $44.94= $15.06
4
Return drag (8% of unrecoverable cost)
8% × ($22 + $6 + $8)= $2.88
5
Contribution margin per order
$15.06 − $2.88 = $12.18 → ÷ $60= $12.18 (20.3%)

Result

Contribution margin: 20.3%

Each order contributes $12.18 after all variable costs — a 20.3% contribution margin. Returns alone shave off $2.88 per order.

Contribution margin per order after every deduction

Price minus goods, marketplace and payment fees, shipping, and advertising, then reduced again by the share of orders that come back. Rows use a 15% platform fee, a 2.9% payment fee, and $6 shipping.

Price	COGS	Ad cost	Return rate	Fees	Total cost	Before returns	Return drag	Contribution
$40	$18	$8	10%	$7.16	$39.16	$0.84	$3.20	-$2.36 (-5.9%)
$60	$18	$8	10%	$10.74	$42.74	$17.26	$3.20	$14.06 (23.4%)
$60	$18	$8	25%	$10.74	$42.74	$17.26	$8.00	$9.26 (15.4%)
$60	$18	$14	10%	$10.74	$48.74	$11.26	$3.80	$7.46 (12.4%)
$60	$24	$8	10%	$10.74	$48.74	$11.26	$3.80	$7.46 (12.4%)
$120	$36	$15	15%	$21.48	$78.48	$41.52	$8.55	$32.97 (27.5%)

The first row loses money on every order despite a healthy-looking 55% gross margin on goods alone: fees, shipping, and acquisition consume it. Rows four and five show that $6 of extra ad spend and $6 of extra product cost do exactly the same damage.

An e-commerce contribution margin calculator reveals the number that actually determines whether an online store makes money: what is left from a single order after every variable cost is subtracted, not just the product cost. Gross margin — price minus COGS — is the figure most sellers quote, but it is dangerously optimistic because it ignores the stack of per-order costs that modern e-commerce piles on top. Contribution margin subtracts all of them, leaving the amount each sale genuinely contributes toward fixed costs and profit.

The model stacks the real cost layers. Marketplace or platform fees (Amazon, Etsy, a Shopify app, or a payment platform) take a percentage of every sale, and payment processing adds another few percent. Product cost, or COGS, is the landed cost of the goods. Shipping and fulfillment covers pick-pack, postage, and packaging. Ad cost per order — effectively your customer acquisition cost spread across orders — is often the single largest variable line for a paid-traffic brand, and leaving it out is the most common way sellers fool themselves into thinking a losing product is profitable. Finally, returns apply a drag: a share of orders come back, and on those you rarely recover the product, the outbound shipping, or the ad spend, so the calculator subtracts that unrecoverable cost across all orders. What remains is the contribution margin per order, expressed in both dollars and as a percentage of price.

The reason to compute this per platform and per country, as the source research recommends, is that almost every input changes across channels. Marketplace fees differ, payment rates vary by region, shipping to one country can be triple another, ad costs swing with competition, and return rates are far higher in some categories and geographies than others. A SKU that contributes a healthy margin on your own website can be break-even or loss-making on a high-fee marketplace once you add its commission, higher returns, and the ad cost to win the click. Run the calculator once for each channel and SKU you sell, and prioritize the combinations that actually contribute — not the ones with the best-looking gross margin.

Contribution margin vs gross margin

Gross margin only subtracts COGS from price. Contribution margin subtracts every variable cost of fulfilling the order — platform fees, payment fees, shipping, ad cost, and returns. A product can show a 60% gross margin and a 15% (or negative) contribution margin once those are stacked. Contribution margin is the number that tells you if a sale is actually worth making.

Ad cost and returns are the silent killers

For paid-traffic brands, ad cost per order (CAC spread over orders) is frequently the biggest single deduction, and returns quietly erase margin because you lose the product, the outbound shipping, and the ad spend on every returned order. Two products with identical gross margins can have wildly different contribution once you account for how expensive each is to acquire and how often each comes back.

Frequently asked questions

I sell a $60 product costing $22, with 12% platform + 2.9% payment fees, $6 shipping, $8 ad cost, and 8% returns — what's my contribution margin?

Fees are ~$8.94, so total cost per order is ~$44.94, leaving $15.06 before returns. Returns drag off about $2.88 (8% of the $36 unrecoverable cost), giving a contribution of ~$12.18 per order, or a 20.3% contribution margin. That $12.18 is what's actually left to cover fixed costs and profit.

Why should I run this separately for each platform and country?

Almost every input changes by channel: marketplace commissions, payment rates, shipping distance and cost, ad competition, and return rates all differ. A SKU that's healthy on your own site can be break-even on a high-fee marketplace. Model each channel to see which combinations actually contribute.

How is contribution margin different from profit?

Contribution margin is per-order and covers only variable costs. Profit also subtracts fixed costs — rent, salaries, software, overhead. Contribution margin tells you how much each sale chips in toward those fixed costs; once total contribution exceeds fixed costs, the business is profitable. It's the bridge between unit economics and the P&L.