Profit
What is Contribution margin?
What is left from a sale after every cost that varies with that sale, including product, fees, fulfillment and advertising. It is the money each unit contributes toward fixed costs and profit, which makes it the honest per-unit number.
Why it matters in practice
Gross margin flatters an ecommerce business because it stops at product cost and ignores everything the channel takes. Contribution margin keeps going: subtract the marketplace referral fee, the fulfillment cost, the share of returns, and the advertising spent to win the sale, and what remains is what the product genuinely contributes. It is the right number for deciding what to keep selling. A product with a healthy gross margin and heavy ad dependence can contribute less than a lower-margin product that sells on its own, and you cannot see that difference until advertising is charged to the unit. It is also the number that sets break-even ACoS, because contribution before advertising is the entire budget advertising has to work inside.
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