Set the decision boundary before using the numbers
Inputs and records to align
- One sales channel, order cohort, period, currency and tax basis. (not complete)
- Net order revenue after discounts, refunds and indirect-tax treatment. (not complete)
- Product, packaging, payment, platform, fulfilment and merchant-funded shipping costs. (not complete)
- Expected return or refund cost on a stated realised or scenario basis. (not complete)
- Acquisition cost allocated to the same acquired-order or customer boundary. (not complete)
- A separate inventory-cash and fixed-cost view for decisions beyond order contribution. (not complete)
Build one transparent decision model
Contribution after acquisition = net order revenue - product cost - payment and platform fees - fulfilment and shipping cost - expected return cost - acquisition cost
- net order revenue
- Merchant revenue after included discounts, refunds and tax treatment (CU per order) — order and settlement records
- operating order costs
- Product, fee, fulfilment, shipping and return layers inside the declared boundary (CU per order) — invoice, contract and operational records
- acquisition cost
- Included campaign cost on an aligned acquired-order or customer basis (CU per order or acquired customer) — campaign and attribution records
Use consistent denominators. A customer acquisition cost cannot be subtracted from each order unless it has been deliberately converted to an aligned order basis.
- Reconcile order revenue to the merchant settlement.
- Subtract product and order-level operating costs one named layer at a time.
- Model returns on a consistent realised or expected basis.
- Align acquisition cost with the selected order or customer denominator.
- Stress-test shipping, returns, discount and acquisition inputs separately.
- Hand off to fixed-cost, inventory-cash or cohort tools for the next decision.
Worked example: bridge one ecommerce order
Invented order: 100 CU net revenue, 35 product cost, 4 payment/platform fees, 12 fulfilment/shipping, 5 expected return cost and 18 acquisition cost.
| Line | Calculation | CU |
|---|---|---|
| Contribution before acquisition | 100 - 35 - 4 - 12 - 5 | 44 |
| Acquisition cost | entered on aligned order basis | (18) |
| Contribution after acquisition | 44 - 18 | 26 |
| Contribution margin | 26 ÷ 100 | 26% |
| Case | Changed input | Result | Decision signal |
|---|---|---|---|
| Higher shipping | Shipping layer +6 CU | 20 | Review threshold and carrier terms |
| Base | Entered cost stack | 26 | Validate denominator |
| Higher acquisition | Acquisition +10 CU | 16 | Review channel economics |
Reconcile the order cascade before a cross-border hand-off
| Layer | Required boundary | Exact owner or hand-off | Stop condition |
|---|---|---|---|
| Retained revenue | One completed order, currency and tax basis | Ecommerce Order Profitability | Settlement does not reconcile to the order record |
| Product and fulfilment cost | Saleable-unit product cost plus named fulfilment scope | Ecommerce Order Profitability | The product-cost boundary differs between scenarios |
| Channel and payment cost | Current contract components on the same order basis | Marketplace and payment-fee methods | A fee base, condition or date is missing |
| Returns and acquisition | Expected loss and acquisition cost on aligned denominators | Ecommerce Order Profitability and ROAS Contribution | Return or CAC is subtracted twice |
| Detailed cross-border allocation | Supplier values, saleable units, freight, insurance, brokerage and user-verified duty or tax treatment | International Landed Cost Margin | Shipment allocation or customs/tax treatment is unsupported |
| Compact FX stress | Known domestic unit cost, foreign-exposed share and current/adverse FX on one quote basis | Cross-border Price Buffer | The same adverse FX movement already exists in landed cost |
Route to the calculation owner
- Ecommerce Order Profitability Planner
Test order contribution after the full fee stack
- ROAS to Contribution Planner
Set target CPA and ROAS from contribution before advertising
- International Landed Cost & Margin Planner
Allocate landed costs and protect margin under adverse FX
- Cross-border Price Buffer Planner
Set a price buffer for adverse currency movement
Review the operational trade-offs before acting
- Calling gross margin after product cost “net profit”.
- Omitting fixed payment fees, packaging, merchant-funded shipping or return handling.
- Combining per-customer CAC with per-order contribution without conversion.
- Treating attributed revenue as incremental revenue.
- Using accounting inventory cost and cash timing interchangeably.
- Extending one-order contribution into an unbounded lifetime-value claim.
Decision questions
- Is contribution after acquisition the same as profit?
- No. It still has to recover fixed operating costs and does not describe inventory, settlement or tax cash timing.
- Where should returns appear?
- Use a documented realised or expected return-cost boundary and avoid subtracting the same refund or recovery twice.
Sources and methodology
- Ecommerce Order Profitability methodology — Margin101: Product-owned order revenue, cost-stack and contribution mechanics.
- ROAS to Contribution methodology — Margin101: Acquisition denominator and attribution boundaries.
Test the editable scenario
- Ecommerce Order Profitability Planner
Test order contribution after the full fee stack
- Returns Profit Impact Planner
Test period contribution after returns and recovery assumptions
- ROAS to Contribution Planner
Set target CPA and ROAS from contribution before advertising
- Inventory Funding Gap Planner
Identify the peak cash funding gap between inventory payments and customer collections