Contribution margin is the dollars left over from each sale after you subtract every variable cost — the true amount each unit contributes toward paying fixed costs and then generating profit. It is the single most honest number in ecommerce unit economics, and it is also the number most founders quote incorrectly because they confuse it with gross margin. This calculator takes your price, variable cost per unit, fixed costs, and units sold, and returns your contribution margin per unit, contribution margin percentage, total contribution, and the break-even units implied by your fixed-cost base. It is designed for mid-market Shopify Plus operators who want to stop arguing with finance about whether a SKU is actually profitable and start making pricing and promo decisions against a defensible number.
Average realized selling price after standard promo activity.
COGS plus pick-pack, outbound freight, and payment fees.
Salaries, rent, software — anything that does not scale with order volume.
Total units moved in the period you are modeling.
Contribution Margin per Unit
$52.00
Contribution Margin %
57.78%
Total Contribution
$130,000
Break-Even Units
1,154
Contribution margin per unit is calculated as Unit Price minus Variable Cost per Unit. Variable cost should include every dollar that scales with each additional order: product COGS, inbound freight amortized per unit, outbound fulfillment (pick, pack, ship), packaging, payment processing, and return handling reserves. It should NOT include fixed overhead like salaries, rent, or software subscriptions — those live in fixed costs. Contribution margin percentage is Contribution Margin per Unit divided by Unit Price, expressed as a percentage. Total contribution is Contribution Margin per Unit multiplied by Units Sold, and represents the pool of dollars available to cover fixed costs and then drop to profit. Break-even units is Fixed Costs divided by Contribution Margin per Unit — the number of units you have to sell before total contribution equals fixed costs. This model assumes a single SKU or constant mix. If you run a wide catalog with very different margin profiles per SKU, calculate contribution margin at the SKU level and weight by mix rather than running a blended average, which will hide your worst performers.
Healthy mid-market DTC contribution margins generally land between 35 and 55 percent. Beauty and supplements brands with strong pricing power hit 55 to 65 percent. Apparel typically runs 30 to 45 percent. Electronics and commodity categories often fall below 25 percent, which is where unit economics start getting fragile — any freight rate bump or CAC increase pushes the product into negative territory. The test is not just whether contribution margin is positive; it is whether total contribution is large enough to cover fixed costs with margin to spare. A brand doing 2,500 units at a 52 dollar contribution margin generates 130,000 in contribution — if fixed costs are 60,000, you have 70,000 of operating leverage. If fixed costs are 125,000, you are barely breaking even and any volume dip puts you underwater. Contribution margin is also the right number to use when deciding whether to fulfill low-ticket or heavily discounted orders: if contribution is negative, more volume makes the problem worse, not better.
Contribution margin calculated at the period level is a planning number. Contribution margin calculated at the order level is an enforcement number — and that is where mid-market brands lose money they did not budget for. A promo code plus a remote zip plus a restocked return can turn a 52 dollar contribution margin into a negative number on a specific order, while the blended number still looks fine. Agentis recomputes contribution margin per order in under 10 milliseconds against live COGS, live freight zones, and live discount stacks, and blocks orders that fall below your floor before they ship. The calculator gives you the target; Agentis makes sure every individual order clears it.
Gross margin deducts only COGS from revenue. Contribution margin deducts COGS plus every other variable cost — fulfillment, payment fees, packaging, and outbound freight. Contribution margin is always lower than gross margin and is the more honest number for unit economics decisions.
For most mid-market DTC categories, 40 percent is solid. Beauty and supplements should push higher (50 to 65 percent); apparel 30 to 45 percent is normal; commodity electronics may only hit 15 to 25 percent. Evaluate it against your category benchmark, not an absolute.
Performance marketing that scales with each acquired customer (Meta, Google) should be modeled as a variable cost per unit when you are assessing true unit economics. Brand marketing overhead sits in fixed costs. Many brands conveniently leave CAC out of contribution margin to make the number look better — do not fall into that trap.
Break-even units equals fixed costs divided by contribution margin per unit. It tells you exactly how many units must sell before contribution covers fixed costs and the next unit starts dropping into profit.
Calculator
Free profit margin calculator for ecommerce. Calculate gross margin, net margin, and total profit from revenue, COGS, and operating expenses — with benchmark context.
Calculator
Free break-even calculator. Calculate break-even units and break-even revenue from fixed costs, unit price, and variable cost — with contribution margin analysis.
Calculator
Calculate your all-in true product cost: landed cost, fulfillment, returns, and payment fees. See how much your naive COGS margin is overstating reality.
Margin Analysis
The revenue remaining after deducting all variable costs associated with fulfilling an order — including COGS, shipping, payment processing fees, and pick-and-pack labor.
Margin Analysis
The percentage of revenue remaining after subtracting the cost of goods sold — a foundational profitability metric that excludes operating expenses, taxes, and interest.
Margin Analysis
The gradual, often undetected loss of profit across many orders — driven by small per-order cost overruns that compound into significant revenue erosion over time.
Contribution Margin %
Contribution margin benchmarks that account for COGS, shipping, fulfillment, returns, and payment processing — the true measure of ecommerce order profitability.
Gross Margin %
Industry gross margin benchmarks across 8 major ecommerce verticals — health, beauty, fashion, electronics, home, pet, food, and jewelry.
Free Audit — No Commitment
Agentis blocks Shopify Plus checkout orders that fall below your profit floor in under 10ms. Start a free 7-day audit and see your order-level profitability.