Revenue rankings and profit rankings rarely match. Heavy or bulky products, heavily discounted heroes and products with high return rates can sit at the top of sales and near the bottom of profit.

Share each order’s costs across its products by value, then compare each product’s share of revenue with its share of contribution. The gaps show where to change price, bundle or ad budget.

Formula

Product contribution = Net sales − Product cost − Share of shipping, fees, discounts and RTO
Work it out: Margin and markup

Margin from cost and price, or the price you need for a target margin, with tax handled properly.

Related terms

Where this comes up

Is your best seller losing money? How to measure product profitabilityRevenue rankings hide the products that lose money. How to build a product P&L that shares shipping, fees, discounts and RTO fairly, and what to do with the gaps it finds.

Part of the growth marketing glossary by Shiva Sharma.