Contribution Margin

Revenue minus variable costs such as product, shipping and payment fees, showing what each sale contributes toward fixed costs and profit.

By Brandon MinaCEO, BrandPilot AIUpdated November 2026

Short answer

Contribution margin is revenue minus the variable costs tied to each sale, such as product cost, shipping, payment fees and often ad spend. It shows how much each order contributes toward fixed costs and profit. Marketers use it to judge whether campaigns are truly profitable, since high revenue can still produce thin or negative margins.