Glossary
Contribution Margin
Revenue minus all variable costs (COGS, fees, shipping, advertising). The real profit metric for Amazon sellers.
Why it matters for Amazon sellers
Revenue means nothing if you are losing money on every sale. Contribution margin strips away the vanity metrics and shows what is actually left after Amazon fees, COGS, shipping, and ad spend. It is the only metric that tells you whether a product (or the whole account) is actually profitable. Most sellers optimize for revenue or ACoS when they should optimize for this.
How Profasee handles this
Every decision Oracle and Marko make is anchored to contribution margin. Price changes, bid adjustments, and budget allocation all optimize for real profit — not revenue growth that hides margin erosion.
Frequently asked questions
What is contribution margin for Amazon sellers?
Contribution margin is revenue minus all variable costs: cost of goods sold, Amazon referral and FBA fees, shipping, and advertising spend. It shows the actual profit each product (or the account) generates before fixed overhead.
Why is contribution margin better than gross margin?
Gross margin only subtracts COGS from revenue. Contribution margin also accounts for Amazon fees, shipping, and ad spend — the costs that actually determine whether an Amazon product is profitable. Two products can have identical gross margins but wildly different contribution margins.
Related terms
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ACoS (Advertising Cost of Sales)
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TACoS (Total Advertising Cost of Sales)
The ratio of total ad spend to total revenue, including organic sales. Measures how advertising affe...
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