Metrics & KPIs
Contribution Margin
Revenue per order minus all variable costs (COGS, shipping, payment fees, ad cost). The amount each order contributes toward fixed costs and profit.
Contribution margin per order = Revenue − COGS − Shipping − Payment fees − Ad cost. It's what each order contributes toward covering fixed costs (software, salaries, overhead) and profit.
Example on a $49 product:
| Revenue | $49.00 |
| Product COGS | −$13.50 |
| Shipping | −$5.50 |
| Payment fees | −$1.72 |
| Ad cost | −$16.00 |
| Contribution margin | $12.28 (25%) |
Healthy contribution margin for a scalable dropshipping store is 20-35%. Below 20%, you can't absorb refunds, support costs, or ad-cost spikes. Above 35%, you're likely under-pricing or under-spending on ads and leaving growth on the table.
Articles mentioning Contribution Margin
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- The 7 Metrics That Separate $10K Stores from $100K StoresRevenue is a vanity number. Seven other KPIs predict whether you scale or stall — and most dropshippers never track a single one of them.
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