Calculating Contribution Margins | eCommerce 101

We calculate contribution margin per unit and overall for an eCommerce startup.

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We learn about how to calculate contribution margin for eCommerce businesses. First we organize our income statement into a contribution margin-focused view, and then we look at all of our ecommerce profit margins per unit (unit economics).

Most businesses are optimizing the ratio of contribution margin: CAC, which effectively tells you whether you can make money or not.

0:42 gross margin vs. contribution margin
3:07 sponsor: Bainbridge helps shopify-based eComm startups build financial models
3:58 unit economics breakdown for ecommerce
5:24 contribution margin ratio
5:56 contribution margin full income statement walkthrough
8:08 COGS vs fulfillment for ecommerce
10:42 post-marketing contribution margin (CM – CAC)

By the end of this video, you will be able to confidently breakdown your eComm profit margins – I guarantee it.

If you have questions – leave a comment below and I’ll try to help. Cheers!

#contributionmargin #ecommerce #uniteconomics

*Disclaimer: this video is sponsored by

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Eric Andrews

Questions? Let me know in the comments.


Could you do an exercise on SAAS please? It is unclear what would be the equivalent of "fulfillment costs". Would it make sense to look at the evolution of contribution margin per annual cohort to see how profitable customers become over time? Thanks