See POAS vs revenue-only reporting
Profit Bid connects store costs to ad spend so you bid on margin — not vanity ROAS.
Where a $100 order goes
- COGS42%
- Shipping11%
- Fees4%
- Contribution margin43%
Contribution margin is what is left after variable costs — the pool ads (and fixed costs) draw from.
Track POAS automatically from your store — upload profit conversions and scale winners with A/C/X labels.
What goes into contribution margin
Start with order revenue, then subtract every cost that varies with the order: product COGS, inbound and outbound shipping, payment processing, and fulfillment handling.
What is left is the contribution margin — the amount each order 'contributes' toward fixed costs (rent, salaries) and, ultimately, profit.
Why bidding should use contribution margin
Bidding on revenue treats every dollar equally. Bidding on contribution margin recognizes that a discounted, heavy-to-ship SKU contributes far less than its price suggests.
Profit Bid maps these variable costs from your store into per-order contribution, then uploads it as the conversion value — so Smart Bidding optimizes real margin.
Frequently asked questions
Common questions about this topic — tap to read answers.
Is contribution margin the same as gross profit?
Not exactly. Gross profit typically subtracts only COGS. Contribution margin also subtracts shipping, fees, and other variable order costs.
How does contribution margin relate to POAS?
POAS divides ad-attributed contribution margin by ad spend. Contribution margin is the numerator that makes POAS meaningful.
