Log in with GoogleContribution margin calculator
Work out what one order or product leaves after its variable costs: product cost, shipping, payment fees, packaging and returns. You get the contribution margin in euros and as a percentage, and the break-even ROAS it sets for your ads.
Your results
Each order leaves €44.33 (44.3%) to pay for ads and fixed costs.
- Contribution margin per order
- €44.33
- Contribution margin %
- 44.3%
- Break-even ROAS
- 2.26
- 2.73 if your conversion values include VAT
- Price excl. VAT
- €100.00
- Gross profit (after product cost)
- €55.00
- Payment fees
- €2.67
- Returns allowance
- €1.50
- Total variable costs
- €55.67
- Contribution margin
- €44.33
- Total contribution margin
- €22,165
- Result after fixed costs
- €7,165
- Orders to cover fixed costs
- 339
Amounts per order, excl. VAT. Ad spend stays out: break-even ROAS compares the contribution margin with it.
Start values are illustrative data.
How it works
Every step behind the numbers, worked through for the start values.
The start values describe one order: a €121.00 selling price incl. 21% VAT, €45.00 product cost, €5.00 shipping, a payment fee of 2% plus €0.25, €1.50 packaging, and 10% of orders returned at €15.00 each. Illustrative data.
| Step | Calculation | Result |
|---|---|---|
| Price excl. VAT | €121.00 ÷ 1.21 | €100.00 |
| Product cost | Excl. VAT | €45.00 |
| Shipping | Per order | €5.00 |
| Payment fees | €121.00 × 2% + €0.25 | €2.67 |
| Packaging | Per order | €1.50 |
| Returns allowance | 10% × €15.00 | €1.50 |
| Total variable costs | Sum of the five costs above | €55.67 |
| Contribution margin | €100.00 − €55.67 | €44.33 |
| Contribution margin % | €44.33 ÷ €100.00 | 44.3% |
| Break-even ROAS | 1 ÷ 0.4433 | 2.26 |
Each order leaves €44.33 to pay for ads and fixed costs. With 500 orders and €15,000 of fixed costs in a month, the total contribution margin is €22,165.00 and €7,165.00 is left after fixed costs. The fixed costs are covered from order 339.
Formula
What is contribution margin? Revenue minus the costs each sale brings.
Contribution margin is the revenue from a sale minus its variable costs, such as product cost, shipping, payment fees and returns. Divide it by revenue to get the percentage. Use revenue excluding VAT.
Fixed costs such as rent and salaries stay out. This calculator measures contribution before ad spend, so you can compare it with your advertising costs. Gross margin deducts cost of goods sold, which can include production overheads; this model starts with the product cost you enter, then deducts the variable costs of each sale.
- Contribution margin = revenue excl. VAT − variable costs
- Contribution margin % = contribution margin ÷ revenue excl. VAT
Use it per product. Product cost, shipping weight and return rate differ from product to product, so two products at the same price can leave very different amounts.
Contribution margin: formula and worked exampleVariable costGross margin vs net marginAds
From contribution margin to break-even ROAS, product by product.
Break-even ROAS is 1 ÷ contribution margin %. At the start values that is 1 ÷ 0.4433 = 2.26: below that ROAS, ads for this order cost more than it leaves. If your Google Ads conversion values include VAT, compare against 2.73 instead.
Because the margin differs per product, so does break-even. Product Metrics works on ROAS right away; connect margins to switch to POAS, profit on ad spend, where 1 is break-even.
Break-even ROAS calculatorContribution margin questions, answered.
How do you calculate contribution margin?
What is the difference between contribution margin and gross margin?
Is ad spend a variable cost in contribution margin?
Should the price include VAT?
How many orders do I need to cover my fixed costs?
See the margin and return of every product, not one average.
Product Metrics segments your products by advertising clicks and return against your target, and writes each segment to a Merchant Center label your campaigns use.