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Methodology

Multi-channel Profit Comparison methodology

Compare retained contribution across direct and marketplace channels.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Direct Contribution Ex Tax
directContributionExTax = exact direct-channel contribution

Where

directContributionExTax
Direct Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Marketplace Contribution Ex Tax
marketplaceContributionExTax = exact marketplace contribution

Where

marketplaceContributionExTax
Marketplace Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Contribution Delta Ex Tax
contributionDeltaExTax = marketplace contribution − direct contribution

Where

directContributionExTax
Direct Contribution Ex Tax (currency units, ex tax)Source: Calculated output
marketplaceContributionExTax
Marketplace Contribution Ex Tax (currency units, ex tax)Source: Calculated output
contributionDeltaExTax
Contribution Delta Ex Tax (currency units, ex tax)Source: Calculated output
Direct Margin Rate
directMarginRate = direct contribution / retained direct revenue

Where

directContributionExTax
Direct Contribution Ex Tax (currency units, ex tax)Source: Calculated output
directMarginRate
Direct Margin Rate (decimal rate)Source: Calculated output
Marketplace Margin Rate
marketplaceMarginRate = marketplace contribution / retained marketplace revenue

Where

marketplaceContributionExTax
Marketplace Contribution Ex Tax (currency units, ex tax)Source: Calculated output
marketplaceMarginRate
Marketplace Margin Rate (decimal rate)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Direct Contribution Ex Tax
16,336 currency units
Marketplace Contribution Ex Tax
15,478.4 currency units
Contribution Delta Ex Tax
-857.6 currency units
Direct Margin Rate
35.5%
Marketplace Margin Rate
24%

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The marketplace contribution difference isolates how the entered order volumes and channel fee stacks change retained contribution.

3. Validation and boundary checks

  • All values must be finite and inside the visible validation boundaries.
  • Rates are entered as percentages and calculations retain decimal precision.
  • Money uses one consistent ex-tax currency and planning period.
  • Operating fit: confirm that each channel can support the required catalogue, inventory workflow, fulfilment process, cash timing, returns handling and data access; contribution alone does not establish fit.
  • Service checkpoint: compare response standards, customer ownership, issue resolution and the service effort required in each channel on the same order and planning-period basis.
  • Use the contribution comparison together with these operating and service checks; it is not a provider recommendation or a sales-volume forecast.

4. Assumptions and source classification

  • Provider fees, exchange rates, return behaviour and operating performance are user-entered scenarios.
  • No provider plan, jurisdiction, tax rate or market benchmark is embedded.
  • The engine retains full precision and display formatting never feeds back into calculation.

This comparison calculator has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, provider changes, exchange rates or operational performance.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this comparison calculator. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.

Related reading

Guides to interpret the decision and its assumptions.

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