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Contribution margin calculator

Enter revenue, product costs, and optional variable costs to see contribution margin dollars and percent — the ceiling for CPA and max CPC.

CM1 vs CM2 in practice

CM1 is typically revenue minus COGS (product contribution). CM2 often subtracts additional variable costs such as shipping, payment fees, or marketplace fees. Your finance labels may differ — be consistent.

Ad CPA should sit below contribution per order, or Smart Bidding will scale unprofitable volume.

CM $ = revenue − variable costs (define your stack)
CM % = CM $ ÷ revenue
Use CM per order as the CPA ceiling before ads

Why ads teams need contribution margin

ROAS targets without CM produce false confidence. Map COGS accurately, compute contribution by margin band, then set break-even ROAS, max CPC, and POAS buffers from that truth.

Frequently asked questions

What is contribution margin?

Contribution margin is revenue left after variable costs of fulfilling the sale. It is the pool that must cover advertising, fixed costs, and profit.

How do you calculate contribution margin?

Subtract variable costs from revenue. Example: $100 revenue, $40 COGS, $10 shipping/fees → $50 contribution ($50 CM, 50% CM). Define which fees belong in CM1 vs CM2 for your books.

What is a good contribution margin?

Higher CM % supports higher CPA and lower break-even ROAS. “Good” depends on category and fixed-cost load — use your CM to set bid floors rather than copying a peer brand’s ROAS.