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Glossary · Profit

Contribution margin

What the orders earned after VAT, goods, shipping, fees and refunds — before any ad was paid for and before fixed costs. It is what pays for both.

Sales€7,940
VAT inside the price−€1,429
Refunds−€167
Cost of goods−€2,103
Payment fees−€135
Contribution before ads€4,106
Contribution margin51.7%
Worked on the example store’s July 2026, which adds up line by line.

01 / How it is worked out

The formula

Formula

(Sales − VAT − refunds − cost of goods − shipping − payment fees) ÷ sales

Example

The example store’s July 2026 contributed €4,106 before ads — 51.7% of €7,940 in sales.

02 / Why it matters

What it changes in a decision

  • Contribution is the money a sale leaves to pay for everything that does not change with each order: the ads that bring the orders, and the fixed costs that keep the shop open.

  • It is the number that decides how much an ad can cost, how deep a discount can go and how many orders a month has to sell to break even.

See every one of these on your own store.

Profflow works them out from your orders, ads and costs, order by order — read-only, in about ten minutes.