Contribution Margin
Category: Finance
Also searched as: Contribution profit
Definition (plain English)
Revenue remaining after variable costs such as COGS, freight, payment fees, fulfillment, commissions, discounts, and returns.
Why it matters commercially
Contribution margin shows whether a product, channel, or order type helps pay fixed costs after real variable execution costs.
Example
A product with 42% gross margin had only 12% contribution after marketplace fees, pick-pack, returns, and paid-search spend.
Common mistake
Using gross margin as the decision metric when channel fees, delivery, payment, returns, and promo costs vary by order.
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