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Metrics

Contribution Margin

Contribution margin is the revenue left from a sale after the variable costs of delivering it — what is actually available to cover marketing and overhead.

What it means

Revenue is not profit. Contribution margin strips out the variable cost of each sale — cost of goods, payment fees, shipping, returns — to show what each order really contributes.

Worked example

An order is AED 150. COGS AED 60, payment fees AED 5, shipping AED 15, expected returns AED 10. Contribution margin = 150 − 90 = AED 60 (40%). A 4x ROAS on this product nets AED 60 − AED 37.50 media = ~AED 22.50 real contribution; at 25% margin the same ROAS breaks even.

Why it matters

Your break-even ROAS and the CAC you can afford are both functions of contribution margin. Optimising media without it is flying blind.

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