Contribution Margin Calculator: Amazon vs. Shopify

Contribution margin is what a sale leaves after the costs that come with it: the product, the channel's fees, getting it to the customer, and the ads that won it. What's left contributes to everything else, like salaries, software and rent, and then profit.

It's the most useful number for comparing sales channels, because each channel has different costs. Amazon charges a referral fee and an FBA fee, but ships for you. Shopify charges less in fees, but you pay for packing and postage. Order sizes differ too. Gross margin hides all of that; contribution margin shows it.

You can express it in dollars per order or as a percent of the order. This calculator shows both, side by side. For the formula, the ratio and break-even, see what is contribution margin.

Amazon:  referral fee = order value × referral rate
         contribution = order value − product cost − referral fee − FBA fee − ad cost per order

Shopify: payment fee  = order value × card rate + fixed fee
         contribution = order value − product cost − payment fee − pick & pack − shipping − ad cost per order

contribution margin % = contribution ÷ order value

• Order value: the average order, before tax and shipping charges.
• Product cost: what the units in an average order cost you, including freight to the warehouse.
• Referral and FBA fees: from Seller Central's Fee Preview. Referral fees are a percent of the sale; in Health & Personal Care and Beauty, it's 8% for items $10 and under and 15% above.
• Payment fee: your card rate plus a fixed fee per order, from Shopify's payment settings.
• Ad cost per order: the channel's ad spend divided by its orders.

A made-up supplement brand sells on Amazon FBA and on Shopify with a 3PL. These are the calculator's example values.

1. Amazon. An average order is $32.00. Product cost $7.00, referral fee 15% = $4.80, FBA fee $5.20, ads $6.00. Contribution = $9.00, or 28.1% of the order.
2. Shopify. An average order is $45.00. Product cost $9.50, payments 2.9% + $0.30 = $1.61, pick and pack $3.50, shipping $6.50, ads $14.00. Contribution = $9.90, or 22%.

Shopify keeps $0.90 more per order, mostly because its orders are bigger. But Amazon keeps more of each dollar. If the brand could raise its Amazon order value, say with a bundle, Amazon would pull ahead. That's why it helps to see both numbers.

Good enough to cover your fixed costs with room left for profit. Multiply contribution per order by monthly orders: if that's below your monthly fixed costs, the business loses money however the channels compare.

• Negative: each order loses money. Usually ads cost too much per order, or the order is too small for the fees.
• Positive but thin: works at high volume, but a fee increase or a return can wipe it out.
• Comfortable: room to spend more on ads to grow, as long as the extra spend causes extra orders.

What counts as comfortable depends on your category, price and fixed costs, so compare your channels with each other and with your own past months rather than other brands.

• Leaving out ads. Margin before ads makes every channel look better than it is. Ads are often the biggest cost per order.
• Forgetting returns and storage. Returns, monthly storage and long-term storage fees aren't in Fee Preview's per-unit fee. Spread them across orders if they're large.
• Counting shipping twice. If customers pay for shipping on Shopify, subtract that from your postage cost.
• Comparing percents only. A higher percent on a smaller order can still mean fewer dollars. Look at both.

"Ad cost per order" assumes you know which ads drove which orders. You often don't. Meta ads drive Amazon sales that Amazon never credits to them, so dividing Meta spend by Shopify orders makes Shopify look more expensive and Amazon cheaper than they are.

To split ad cost honestly, measure what the ads cause on each channel. Plan a test with the holdout test calculator, read the results with the incremental ROAS calculator, and see how far your reports are off with the attribution gap calculator. For the ROAS each channel needs to break even, use the break-even ROAS calculator.