Revenue tells you how busy you are; contribution margin tells you whether the business can afford to grow. Before any marketing decision, you need to know what one average order actually leaves behind.
Build the Order Waterfall
Start with average order value. Subtract product cost (landed, including inbound freight and duties), pick-and-pack, outbound shipping you pay, payment processing, packaging, and an allowance for returns and refunds. What remains is contribution margin before marketing. Write each line as a per-order figure taken from your actual invoices and payout reports, not a guess.
Use Your Own Sources
Payment processor, marketplace and shipping charges change and differ by account, so never copy someone else's percentages. Export one month of payouts from your processor and your shipping platform, divide by the number of orders, and use those real per-order averages. Revisit them every quarter.
Margin by Product, Not Just Store
A store-wide average hides products that lose money. Repeat the waterfall for your top ten products by volume. You will often find one heavy or frequently returned item quietly canceling the profit from two others. That finding shapes which products you advertise.
Action Step
Create a spreadsheet with one row per top-ten product and columns for price, landed cost, fulfillment, shipping, processing, packaging, returns allowance and contribution margin. Fill it from real invoices and payouts and highlight any product under your target margin.
Deliverable for this module
Download the Unit Economics Workbook (PDF) and complete the section for this module. It is also available in your account under Downloads.
This lesson is educational content, not professional advice. Platform rules and charges change; confirm current details in official documentation. Results depend on your own situation and effort; no outcome is guaranteed.