What each order actually lets you keep
Revenue tells you how much money moved. Contribution margin is what is left after the costs that move with each sale: discounts, landed COGS, shipping and fulfilment, fees and returns. Step your own numbers down and watch where the margin goes.
Works per order or per period: the percentages hold either way.
Codes, sitewide offers and markdowns.
Cost plus freight-in plus duty: the product cost landed at your warehouse, not ex-factory.
Pick/pack plus outbound shipping, per order.
Payment and transaction fees, as a share of revenue.
Revenue refunded on returned orders. Use your refund rate if you know it.
You keep 38% of every revenue dollar before marketing. Your break-even ROAS floor is built on exactly this number: compute it.
One subtraction, honestly done
Contribution margin is what is left from a sale after the costs that move with that sale are removed. Not gross profit, which stops at cost of goods. Not net profit, which buries the signal under rent, salaries and software.
This is your margin before marketing, computed on what the order really nets. The Math breaks the same step-down into rungs: CM1 after landed COGS, CM2 after fulfilment, shipping and fees, CM3 after variable marketing.
From $80.00 of revenue, each order gives up $4.00 in discounts, $32.00 in landed COGS, $8.00 in shipping and fulfilment, $2.40 in payment and platform fees and $3.20 in returns.
What survives is $30.40 of contribution: 38% of revenue. That single number is what pays for marketing first, then everything fixed, then profit. Gross margin would have stopped the count two steps earlier. Net profit would have buried it under the fixed costs.
These are your live inputs from the calculator above, not a canned example. Change a number up there and this paragraph follows.
Questions operators ask
Gross margin stops at cost of goods: it tells you whether the product itself can carry cost, and nothing about what delivering and selling it costs. Net profit buries the signal under rent, salaries and software, fixed costs that do not move with a sale. Contribution margin sits between them: what is left after only the costs that move with the sale. It is the cleanest measure of whether the next order makes you richer or poorer.
Landed cost: the unit cost plus freight-in plus duty. Outbound shipping to the customer is not COGS, it belongs in fulfilment. Ad spend is not COGS either, it is variable marketing further down the ladder. If you price COGS ex-factory, your margin reads fatter than it really is.
Because the inputs drift. Discount share, freight, fees and return rates move by SKU, code, carrier and month, so a blended calculator is an estimate. The same step-down run against every real order and reconciled to your ledger gives you the number your accountant would sign, and shows which products and customers sit above or below the blended line.
The same step-down, on every order
This page runs one blended set of averages. Blufire computes this per order, customer and SKU, reconciled to your ledger: the difference between an estimate and a number you can act on.