Dan Andrews
18.6K posts

Dan Andrews
@TropicalMBA
I help founders bootstrap businesses from their laptops



Contribution margin is probably the most important metric in Ecom. It's also the most misunderstood. I like to say contribution margin is the cash left over after all variable expenses. Product costs. Pick pack ship. Ads. Merchant fees. Some people include other things. Some don't. That's fine. What matters is you define it for yourself and track the same calculation month in, month out, year in, year out. Here's what good looks like to me: Under 10%: We have a real problem. Time to go back to the drawing board on unit economics, pricing, discounts, and fulfillment costs. 30%: This is the target. Solid foundation. 45-50%+: Actually bad. You're probably underinvesting in the business. Spend more on ads or change up your offer. Use these benchmarks to orient yourself and figure out where to allocate your resources.




















