Contribution Profit
What's left after every cost that grows with each order you take.
What it means
Contribution Profit is what's left of your sales once every cost that grows with volume is paid: product cost (COGS), tax, shipping and the Ad Spend that won the orders. It's a euro figure for the selected period, not a percentage, and it stops before your fixed bills — rent, salaries, software and payment fees.
Show the math
Formula and a worked example
Sales is what you took in. Tax and Shipping were never yours to keep, Ads is what you spent winning the orders, and COGS is what the units cost you.
Worked example. March: €100,000 of sales, €8,000 tax, €7,000 delivery, €20,000 ads, €40,000 COGS. Contribution Profit = 100,000 − 8,000 − 7,000 − 20,000 − 40,000 = €25,000. That's what April's rent and payroll get paid from.
Push harder in April: €115,000 of sales, ads at €30,000, €9,200 tax, €8,000 delivery, €46,000 COGS. Contribution Profit is €21,800. You sold €15,000 more and had €3,200 less to pay the bills with.
It answers the question
Does each extra order actually leave money behind? If this grows when sales grow, more volume is worth buying; if it doesn't, you're paying for revenue with margin.
Why it matters
It's the number that decides whether to scale a channel. Fixed costs don't move with orders, so every euro here above your running costs is profit, and every euro short of them is a bill you still have to pay.
A market stall that takes €1,000 a day and spends €1,010 on stock, pitch and flyers is busy, not in business. Contribution Profit is what tells those two apart, and Contribution MarginContribution MarginProfit left after variable costs to fund the business.30% or more is healthy is the same answer as a percentage when you're comparing periods of different sizes.
What good looks like
There's no standard euro figure — it depends on your size and what your fixed costs run to. Two tests do the job: does it cover your monthly running costs with room to spare, and is it growing at least as fast as Total Sales? To compare against other shops rather than only your own past, use Contribution MarginContribution MarginProfit left after variable costs to fund the business.30% or more is healthy.
How to improve it
| Lever | What you do | Expect | How long | Watch out for |
|---|---|---|---|---|
| Fast Set a free-delivery threshold above your average basket | Make the smallest orders either grow or pay their own postage | Contribution Profit up on the same order count | 2–4 weeks | Baskets sitting just under the line get abandoned rather than topped up, so order count usually dips before basket value catches up. |
| Fast Cut the campaigns that only sold discounted stock | Pause the ad sets whose orders arrive with a code attached and thin margin behind them | Contribution Profit up while Total Sales dip slightly | 2–3 weeks | Those campaigns were also filling your customer list. Fewer first orders now means a smaller repeat base two quarters out. |
| Slow Hold your bulky lines closer to the customer | Stock the heaviest products in the market that buys them most instead of sending every parcel cross-border | Delivery cost down 20–30% on those orders | 1–2 quarters | Split stock means more of it, in two places. Cash goes into inventory and stockouts get likelier on both sides. |
| Slow Price the products ads have to carry | Give the lines you pay to sell enough headroom to survive their own acquisition cost | Contribution Profit up per order | 1 quarter | Higher prices lower conversion on paid traffic first, so cost per order rises even as each order leaves more behind. |
Every lever costs something somewhere. The last column is the one to read twice.
Read it with
Sales can grow while contribution shrinks. Putting the two side by side is the only way to see it happening.
Scaling properly
Growth that paid for itself. Each extra order left money behind after covering its own product, postage and ads.
Buying revenue
Bigger and poorer. The new orders cost more to win than they left behind — the most expensive shape a shop can grow in.
Trimmed back
You dropped sales that cost more than they contributed. Real progress, as long as the cuts don't eat next quarter's customer base.
Losing on both
Fewer orders and less kept from each. Your fixed bills haven't moved, so the bottom line falls faster than sales do.
One is the size of the contribution, the other its quality, and both rising is real scale. The euros rising while the percentage falls means you bought the growth — more in total, less from each sale — which only holds while volume keeps climbing. One number can't show you which of the two you're in.
The gap between them is your Custom ExpensesCustom ExpensesSee the full entry.. Watch the gap rather than either line: Contribution Profit up €10,000 with Net Profit up €2,000 says overheads absorbed most of a good month, and neither figure says that alone.
Common misreads
Not yet. Rent, salaries and software still come out of it. A shop can post a healthy contribution every month and still finish the year down.
Several inputs sit in this line. A supplier increase, a heavier parcel, a shift in tax mix or a discount-led month each move it on their own, so check which one changed before you touch a campaign.
Only if the extra orders paid their own way. A promotion can add €20,000 of Total Sales and take €2,000 off this line once the discount, the postage and the ads behind it are counted.
Also called
Contribution · variable profit · profit after variable costs · marginal profit
See yoursYour Contribution Profit for the period, with each variable cost listed above it.
Open Shopify Profit →