Contribution margin
Contribution margin is what remains of an order after variable costs — product cost, shipping and fulfillment, payment and platform fees, returns allowance. It is the money available to pay for advertising and profit.
Contribution margin per order is the single most load-bearing number in ecommerce advertising: breakeven ROAS is AOV divided by it, breakeven CPA equals it, and POAS bidding sends it (or a banded approximation) to the platforms as the conversion value.
The common failure is computing it once, account-wide, from the flagship product. Margins vary across catalogs and drift over time — compute per margin band and rebase quarterly with finance in the room.
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