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eCommerce Contribution Margin Calculator

Instantly calculate your contribution margin, ROAS, MER, and net profit from a single set of inputs. Built for eCommerce and CPG founders who need clarity on unit economics without waiting for month-end reporting. Plug in your numbers and see exactly where every dollar of revenue goes.

Contribution margin is the single most important metric for any direct-to-consumer brand. It tells you how much money each sale actually contributes toward covering your fixed costs and generating profit, after accounting for all variable expenses: product costs, shipping, payment processing, and advertising.

Most eCommerce operators track ROAS in isolation, but ROAS alone does not tell you whether you are profitable. A 3x ROAS means nothing if your COGS is 50% and your shipping eats another 15%. This calculator breaks your economics into layers: Gross Margin, CM2 (after fulfillment and processing), and CM3 (after ad spend), so you can see exactly where margin leaks occur.

How to use it: Enter your monthly net revenue and variable cost percentages in the inputs below. Adjust your ad spend and fixed costs. The results panel updates instantly, showing dollar amounts, percentages, health benchmarks, and a visual breakdown of your revenue allocation. No login required. Your data never leaves your browser.

Your Numbers

All fields update results in real time.

After returns and discounts
$
Product cost as % of revenue
%
Fulfillment, freight, packaging as % of revenue
%
Shopify Payments, Stripe, etc.
%

Advertising Spend

Facebook, Google, TikTok, SMS, Affiliate combined
$
Rent, salaries, software, insurance, etc.
$

Results

Where Every Dollar Goes $500,000
COGS 34%
Delivery 16.4%
Ads 25%
Fixed 10%
Profit 14.7%
Gross Margin (CM1)
$330,000
66.0%
CM2 (After Fulfillment & Processing)
$248,250
49.7%
Total Ad Spend
$125,000
25.0%
CM3 (Contribution Margin After Ads)
$123,250
24.7%
Healthy
ROAS
4.00x
Healthy
MER
25.0%
Healthy
Fixed Costs
$50,000
10.0%
Net Profit
$73,250
14.7%
Net Margin

Benchmarks for eCommerce Brands

ROAS
Healthy: 2.5x - 4.0x
MER
Target: 25% - 35%
CM3 %
Target: 15% - 25%

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Frequently Asked Questions

What is contribution margin in eCommerce?

Contribution margin is the revenue remaining after subtracting variable costs like cost of goods sold (COGS), shipping, payment processing, and advertising. It represents the portion of each sale that contributes toward covering fixed costs and generating profit. In eCommerce, it is typically broken into layers: CM1 (after COGS), CM2 (after fulfillment and payment processing), and CM3 (after advertising spend).

What is a good contribution margin for eCommerce?

A healthy CM3 (contribution margin after advertising) for eCommerce brands typically falls between 15% and 25% of revenue. Below 10% is a warning sign that the business may struggle to cover fixed costs. Above 25% is considered strong and suggests the brand has efficient unit economics and marketing spend.

What is the difference between ROAS and MER?

ROAS (Return on Ad Spend) is calculated as total revenue divided by total ad spend, expressed as a multiple (e.g., 3.0x means $3 revenue per $1 spent). MER (Marketing Efficiency Ratio) is the inverse: total ad spend divided by total revenue, expressed as a percentage. A 3.0x ROAS equals a 33% MER. Both measure marketing efficiency, but MER is increasingly preferred because it accounts for all revenue, not just attributed revenue.

How do I calculate net profit for my eCommerce business?

Start with your net revenue, then subtract COGS to get gross margin. Subtract fulfillment and payment processing costs to get CM2. Subtract all advertising and marketing costs to get CM3. Finally, subtract your fixed costs (rent, salaries, software, etc.) to arrive at net profit. This layered approach helps you identify exactly where margin is being lost.

Next Step

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A calculator gives you a snapshot. A fractional CFO gives you a roadmap. Book a free diagnostic call and get a detailed breakdown of your unit economics, margin leaks, and the exact levers to pull for more profit.

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