Skip to content

Contribution margin calculator

What does one order really leave once the product, shipping, payment fees and ads are paid? Enter an average order; the result updates as you type.

Without VAT or sales tax, after discounts.

What the goods in an average order cost you, landed: purchase, freight, duties.

Pick, pack, packaging and postage that you pay.

As a % of order value: card processing and platform transaction fees.

Fixed payment fee per order, inserts, an allowance for returns.

Your cost per order from ads (CPA), or total ad spend divided by orders.

Salaries, rent, software: to see the orders that cover them.

Result

Fill in average order value, product cost per order to see the result.

How it works

Revenue is not what you keep. Every order pays for its goods, its shipping and packaging and a payment fee before it pays for anything else. What is left is its contribution margin: the money that pays for ads, then fixed costs, then profit.

The calculator walks down from the order value one cost at a time, so you can see where the margin goes, and how many orders your fixed costs need.

gross profit =
  order value - product cost

contribution margin = order value
  - product cost
  - shipping and fulfillment
  - order value × payment fees
  - other costs per order
contribution margin ratio =
  contribution margin ÷ order value

left after ads = contribution margin
  - ad spend per order

orders to cover fixed costs =
  fixed costs ÷ what each order leaves

What each term means

Average order value
What an average order brings in, without VAT or sales tax, after discounts.
Product cost
What the goods in an average order cost you, landed: purchase price, freight and duties.
Shipping and fulfillment
Pick, pack, packaging and the postage you pay per order.
Payment fees
The percentage your payment provider and platform take from each order. A fixed fee per order goes under other costs.
Ad spend per order
Total ad spend divided by orders, or the cost per order your ads report. For new customers only, it is close to your customer acquisition cost.
Contribution margin
What is left of the order value after every cost that comes with the order.

Before and after ads: the contribution margin before ads is also the most you can spend on ads per order without losing money on it. As a return on ad spend, that is order value divided by contribution margin. The ad spend per order you enter is an average across channels; what each channel adds on its own is a separate question.

Source: OpenStax, Managerial Accounting 3.1: contribution margin per unit and ratio (read 26 September 2026).

Worked example

Example numbers, round on purpose, not a real store:

Average order value
€60
Product cost per order
€22
Shipping and fulfillment per order
€7
Payment fees
2.5%
Other costs per order
€1
Ad spend per order
€15
Fixed costs per month
€9,000
  1. 1Gross profit: €60 - €22 = €38.00, 63.3% of the order
  2. 2Payment fees: €60 × 2.5% = €1.50
  3. 3Contribution margin: €60 - €22 - €7 - €1.50 - €1 = €28.50, 47.5%
  4. 4Left after ads: €28.50 - €15 = €13.50
  5. 5Orders to cover fixed costs: €9,000 ÷ €13.50 = 666.7, so 667 a month
  6. 6Sales to cover fixed costs: €9,000 × €60 ÷ €13.50 = €40,000 a month

In this example €9.50 of every order goes to costs a gross margin never shows, and ads take more than half of what is left.

Frequently asked questions

  • What is contribution margin?
    The revenue from a sale minus the variable costs of that sale: what one more order adds towards fixed costs and profit. As a ratio, it is that amount divided by the revenue. For an online store the variable costs are the product, shipping and fulfillment, payment fees and anything else paid per order.
  • How is contribution margin different from gross margin?
    Gross margin subtracts only the cost of the goods. Contribution margin subtracts every cost that moves with the order, so it is lower and closer to what the order is worth to you. Shipping, packaging and payment fees often sit below the gross margin line in a P&L, which is how a healthy gross margin can hide a thin contribution.
  • Should ad spend count in contribution margin?
    Track it both ways. Before ads, the contribution margin is the most you can pay to win an order without losing money on it. After ads, it is what each order leaves for fixed costs and profit. Enter your ad spend per order and the calculator shows both.
  • What is a good contribution margin for an online store?
    No single figure is worth trusting: it depends on your category, your price point and what your orders cost to ship. The test that matters is your own: does what each order leaves after ads cover your fixed costs at the volume you actually sell? The orders-to-cover line answers that.
  • Where do I find these numbers?
    Average order value is in your store's analytics. Product cost is on supplier invoices, landed: purchase price, freight and duties. Shipping and fulfillment come from carrier or 3PL invoices divided by orders, payment fees from your payment provider's statement, and ad spend per order is total ad spend divided by orders over the same period.

In the glossary: profit margin, customer acquisition cost and return on ad spend.

Related tools

All free tools

Next: which channels bring your orders?

Ad spend per order is an average across every channel. Which channels actually bring the orders is the next question. Your GA4 export already holds how long your buyers take and which channels they touch. First finding free, in your browser; the full read is €99.

Get your first finding freeMore free tools