You might be profitable on paper.
Are you per order?
Gross margin looks good. Contribution margin tells the truth. Five numbers — find out in 60 seconds.
Five inputs, instant result.
Free, no sign-up · 5 inputs, instant results · 2,000+ D2C brands
Find out if every order makes money.
Every order contributes to profit. You can invest in growth. Focus on improving repeat rate to compound LTV.
of D2C brands are gross-margin positive but contribution-margin negative
higher LTV when repeat purchase rate grows from 20% to 40%
reduction in effective CAC possible through AOV uplift and personalisation
What is contribution margin?
The metric that tells you whether scaling will make you rich — or bury you.
Contribution margin is the money left over from each order after paying all variable costs directly tied to that order — cost of goods, shipping, and the per-order portion of your customer acquisition cost (CAC).
It is a more honest measure than gross margin because it includes the cost of getting the customer in the first place.
Three levers to fix your margins
Each one moves contribution margin without touching your ad budget.
Raise Average Order Value
An extra $20 in AOV on the same fulfilment cost flows almost entirely to contribution margin. Product recommendations and bundles are the fastest path.
Improve Repeat Purchase Rate
Every repeat order reduces your effective CAC. Going from 20% to 40% repeat rate cuts your per-order CAC burden by nearly half.
Reduce Effective CAC
Better on-site conversion, personalised onboarding experiences, and referral programmes lower blended CAC without cutting spend.
Where do you stand in your category?
Typical ranges from 2,000+ D2C brands using Glood AI.
| Category | Typical COGS % | Typical shipping | Target CM % | Primary lever |
|---|---|---|---|---|
| Apparel & Fashion | 30–45% | $6–10 | 20–40% | Repeat purchase & bundles |
| Beauty & Skincare | 20–35% | $5–8 | 30–45% | Subscription & replenishment |
| Supplements | 15–30% | $5–9 | 35–50% | Subscription conversion |
| Home & Lifestyle | 35–55% | $10–15 | 15–25% | High AOV cross-sells |
| Food & Beverage | 40–60% | $8–14 | 10–22% | Bundle volume & frequency |
| Pet Products | 30–50% | $7–12 | 20–35% | Auto-ship & loyalty |
Frequently Asked Questions
Find quick answers about Glood.AI's platform, integrations, and the AI agents that power discovery, conversion, and retention, everything you need to scale faster.
What is contribution margin in eCommerce?
Contribution margin is the money left over from each order after paying all variable costs directly tied to that order — cost of goods, shipping, and the per-order portion of customer acquisition cost (CAC). It is a more honest measure than gross margin because it includes the cost of getting the customer.Why is gross margin misleading for D2C brands?
Gross margin only deducts COGS. It ignores shipping, payment processing, and acquisition spend — the things that quietly turn a "profitable" D2C brand into a money-losing one as it scales. Contribution margin reflects what every order actually contributes once those costs are paid.How does repeat purchase rate change the calculation?
CAC is only paid once per customer, but most operators load the full CAC onto every order. We weight CAC by your repeat rate: if 40% of orders are from returning customers, the effective per-order CAC drops by 40%. That single shift can move you from negative to positive contribution margin.What is a healthy contribution margin?
A contribution margin above 25% of AOV is healthy — you can fund growth. Between 10–25% means profitable but fragile: a small CAC spike flips you negative. Below 10% means more volume actually accelerates losses. Industry benchmarks vary, see the category table above.How does Glood AI improve contribution margin?
Glood AI agents lift AOV with smarter product recommendations and upsells, increase repeat rate with personalised onboarding and replenishment, and reduce CAC by converting more first-time visitors. Most brands see +15–25% contribution margin improvement within 90 days.
