Free calculator
Contribution margin calculator
Three margins, not one. CM1 asks whether the product pays, CM2 whether the order pays, and CM3 whether the customer pays. A single contribution margin cannot tell you which of the three went wrong.
Your month
What comes in
What goes out
Your three contribution margins
19CM1
62,0%
€37.200,00
Does the product pay?
25CM2
52,6%
€31.541,60
Does the order pay?
29CM3
27,6%
€16.541,60
Does the customer pay?
You keep €15,90 of every €100 that comes in, across roughly 706 orders. Your heaviest single cost is cost of goods, at 38,0% of net revenue. Every share on this statement is measured against net revenue, which is what makes them comparable to each other.
Run this on my real ordersWhy three
One number hides which cost is the problem
Take two products with the same contribution margin of 22%. One is a heavy €40 item with a good purchase price and an expensive parcel. The other is a light €140 item with a poor purchase price and a cheap parcel. They look identical on a single figure and they need opposite decisions.
Splitting the margin into three layers makes the difference visible on sight. The heavy item has a strong CM1 and a weak CM2, so the answer is a better rate card or a smaller box. The expensive item has a weak CM1 that no amount of logistics work will fix, so the answer is a supplier conversation or a price rise.
The third layer is the one most stores never compute. CM3 takes advertising out, and it is where a product with a healthy CM2 turns out to be losing money because it takes €30 of ads to sell one. That is not a marketing problem or a product problem on its own; it is only visible when the two sit on the same statement.
Overhead comes off below all three and is deliberately not a contribution margin, because rent does not change when you ship one more parcel. What is left after it is EBITDA.
These are lines 14 to 33 of a nouz P&L, in order and unmodified. The calculator above is the same arithmetic on flat rates instead of on individual orders.
Where it goes wrong
Four costs that end up on the wrong line
Contribution margin is only useful if every cost is on the layer it belongs to. These four move around the most, and each one flatters a different margin.
Gross revenue used instead of net
The European mistake. Shopify shows a figure that includes VAT and, depending on where you look, includes orders that were later refunded. Neither is margin. Net revenue is what is left after returns and after tax, and it is the only denominator that makes the percentages comparable.
Get this wrong and all three margins are overstated by roughly a sixth at German rates, in the same direction, so nothing looks obviously broken.
Shipping revenue counted as a cost offset
What the customer paid for delivery is revenue and belongs at the top. What the carrier charged is a cost and belongs in CM2. Netting the two against each other hides both, and it is how a store ends up believing shipping is free when it is running a €2 loss on every parcel.
Payment fees taken out of the wrong base
A gateway charges a percentage of the gross amount it moved, VAT and shipping included, plus a fixed fee per transaction. Applying the advertised percentage to net revenue understates the cost, and ignoring the fixed leg understates it badly on a low basket.
Use the blended rate you actually pay across every gateway, which is rarely the number on any one of their pricing pages.
Overhead mixed into CM3
Agency retainers, software subscriptions and salaries feel like marketing costs when they sit on a marketing budget, but they do not vary with the sale, so they belong below CM3. Only spend that bought this month’s orders belongs in the marketing line.
The exception worth knowing: an influencer retainer or a campaign booked as a one-off really is marketing, and nouz routes costs categorised as marketing into the marketing line rather than into overhead, so each euro is counted exactly once.
Worked example
Where €60.000 of revenue actually goes
An example store, not a customer. €60.000 of net revenue in a month across about 706 orders. Goods at 38%, a parcel at €6,40, gateways at 1,9%, €15.000 of advertising and €7.000 of fixed costs.
CM1 is 62,0%, which is a perfectly respectable apparel margin and the number most merchants would quote if asked. CM2 is 52,6%: shipping and packing alone took nearly ten points. CM3 is 27,6%, because a quarter of net revenue went on advertising.
A store with a 62% margin kept 15,9% of what came in. Nothing here is dysfunctional and no single line is a scandal; the gap is just the sum of four ordinary costs that a gross-margin figure never shows.
Which is the point of computing three margins rather than one. If this store wanted another five points, the statement says exactly where to look first: advertising is the largest single cost below the goods, and it is the one that can be changed this week.
Questions
Contribution margin, answered
What is contribution margin in ecommerce?
What is left from a sale after the costs that only exist because the sale happened. In a store that is not one number but three, because there are three layers of such costs: the goods, then the parcel and the payment fee, then the advertising that won the order. CM1, CM2 and CM3 are those three layers.
What is the difference between CM1, CM2 and CM3?
CM1 is net revenue minus the cost of goods, and it asks whether the product makes money. CM2 takes shipping, picking, packing and payment fees out of CM1, and asks whether the order makes money. CM3 takes advertising out of CM2, and asks whether the customer makes money. A product can pass the first test and fail the third, which is precisely why one contribution margin is not enough.
How do I calculate contribution margin?
Start from net revenue, not gross. Subtract the cost of goods to get CM1. Subtract logistics and payment fees to get CM2. Subtract marketing to get CM3. Divide each one by net revenue for the percentage. Overhead comes off below all three and is not a contribution margin at all, because it does not move when you ship one more parcel.
Is contribution margin the same as gross margin?
No. Gross margin is an accounting figure that usually stops after the cost of goods, which makes it roughly CM1 and only if your cost data is complete. Contribution margin is an operating idea: everything that varies with the sale comes out, wherever it sits in the chart of accounts. The gap between the two is shipping, packing and payment fees, which for a typical DACH store is around 10% of net revenue.
Why is net revenue the denominator for every percentage?
Because a set of percentages is only comparable if they share a denominator. Measuring the cost of goods against gross revenue and marketing against net revenue produces two numbers that cannot be added, compared or subtracted, and it is the reason most spreadsheet P&Ls stop being trusted after a few months. On a nouz statement every cost percentage below net revenue uses net revenue.
Should VAT be in the revenue figure?
No. VAT is collected for the tax authority and passed straight on, so it was never yours and it is not margin. Every figure on this calculator is net of VAT. Putting gross revenue in overstates all three margins by roughly a sixth at German rates, and a merchant who does that will believe a losing product is a thin one.
More calculators
Four more, all free, all built on the same statement.
Want the long version rather than the arithmetic? CM1, CM2 and CM3 explained.
The terms this calculator uses:
The same three margins, per product
nouz computes CM1, CM2 and CM3 for the store, for each period and for every product you sell, from your own orders and your own cost rules.