Data Snacks Video — Contribution Margin

data-snacks-video-—-contribution-margin

Contribution Margin is your top-line sales minus discounts, refunds, returns, product costs, and marketing costs: in short, it is the sales price minus variable costs.

Here’s Jeremy for more on contribution margin:

Why is contribution margin important?

Simply put, contribution margin is important because it reveals how profitable your business is. It is a vital metric that is absolutely necessary over time—ideally, weekly, if your brand is able to do so. By tracking contribution margin, you can understand what costs you must cut back on, and what you can increase investment in.

Special thanks to our friends at Daasity for their insights on this topic.
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Author

Steve has entrepreneurship in his DNA. Starting in the early 2000s, Steve achieved eBay Power Seller status which propelled him to become a founding partner of VisionPros.com, a contact lens and eyewear retailer. Four years later through a successful exit from that startup, he embarked on his next journey into digital strategy for direct-to-consumer brands.

Currently, Steve is a Senior Merchant Success Manager at Shopify, where he helps brands to identify, navigate and accelerate growth online and in-store.

To maintain his competitive edge, Steve also hosts the top-rated twice-weekly podcast eCommerce Fastlane. He interviews Shopify Partners and subject matter experts who share the latest marketing strategy, tactics, platforms, and must-have apps, that assist Shopify-powered brands to improve efficiencies, profitably grow revenue and to build lifetime customer loyalty.

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