Problem · Unclear product profitability
The bestseller sells. But does it also earn?
Revenue per product says little. Only after cost of goods, shipping, fees, and advertising do you see which items carry the business and which just create work.
One product, one result
Take your best-selling item. And work it out.
Enter the values for one unit sold. Then do the same for the product you are least sure about.
Contribution margin per unit
17,50 €
Contribution margin rate 35,1 % · variable costs €32.40
- Cost of goods18,00 €
- Shipping & packaging4,90 €
- Payment and marketplace fees1,50 €
- Ad cost per sale8,00 €
This is how much each unit contributes to fixed costs. Largest cost block: Cost of goods (36.1% of net revenue).
Assumptions and limits
- The calculation applies per unit. You have to factor returns into the costs proportionally.
- Ad costs per sale are an average; for first purchases they are often higher than for repeat purchases.
- Fixed costs such as rent or salaries are left out on purpose. The contribution margin still has to pay for them.
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How you'll notice
The revenue list is clear. The winners list is missing.
- The shop report lists the bestsellers at the top, but nobody knows what they earn after costs.
- Prices were calculated once and haven't been checked since, even though purchasing and shipping got more expensive.
- Discount promotions run the same on all products, no matter how thin the margin is.
Understand the causes
Why the margin per product is so often unknown.
- 01
Costs are only viewed in total
- How you'll notice
- You know the month's shipping costs, but not the cost per order.
- Why it happens
- Invoices from logistics, payment providers, and marketplaces come as totals, not per item.
- What helps
- Divide each cost block once by the number of orders and enter it per product.
- Limit
- An average is enough for a first estimate, but not for bulky or very light outliers.
- 02
The costing is outdated
- How you'll notice
- The selling price has been the same for years, the purchase price hasn't.
- Why it happens
- Prices are calculated at launch and after that only adjusted by gut feeling.
- What helps
- Set a fixed appointment each quarter to recalculate the ten top-selling products.
- Limit
- With strongly fluctuating purchase prices, one quarter is not enough.
- 03
Advertising isn't attributed
- How you'll notice
- A product looks profitable as long as the ad costs sit in the marketing budget.
- Why it happens
- Ad costs are treated as fixed costs even though they occur per sale.
- What helps
- Estimate ad costs per sale and add them as their own line in the calculation.
- Limit
- Without clean attribution per campaign, it stays an estimate.
- 04
Variants are merged
- How you'll notice
- The product pays off, but one size or color keeps coming back.
- Why it happens
- Returns and purchase prices differ by variant, the reporting doesn't.
- What helps
- Calculate the variants with the most returns individually.
- Limit
- With few variants and the same purchasing, the effort doesn't pay off.
Ways to solve it
From the spreadsheet all the way to ongoing costing.
| Way | Enough if | Limit |
|---|---|---|
| Pricing spreadsheet per product | You have up to about twenty products, and your costs rarely change. | Every cost change has to be carried through all rows by hand. |
| Accounting report | You need the total profit for taxes and the bank. | Shows cost types, but no values per product or variant. |
| Pricing in the shop system | Your shop records purchase prices and you only sell there. | Shipping, fees, and advertising are usually missing from the calculation. |
| Peak One | You want contribution margin, scenarios, and minimum margins per product in one place. | The calculation is only as good as the costs entered. |
Peak One in action
From the product range to the pricing decision.
- TriggerWhich products really make money?
- 01 · AssortmentSignalMargin Overview shows where you actually make money.
- 02 · ProductUnderstandingProduct Calculation works out whether each product pays its way.
- 03 · ScenarioDecisionMargin Scenarios shows what happens to margin when price or costs change.
- 04 · RuleActionMargin Rules records which minimum margin applies from now on.
The apps for it
Available in Peak One.
Margin OverviewAvailablePeak MarginWhere do we actually make money?
Product CalculationAvailablePeak ProductsIs every product profitable?
Contribution MarginAvailableProfitHow much is left after all variable costs?
Unit ProductsAvailablePeak Unit EconomicsHow does each product pay off per unit?
Margin RulesAvailablePeak MarginWhich minimum margins apply?
Three steps
Start with ten products. Not with everyone.
- 01 / 03
Choose the top sellers
List the ten products with the most revenue over the last three months.
- 02 / 03
Calculate per unit
For each one, work out the contribution margin per sale, including goods, shipping, fees, and advertising.
- 03 / 03
Tackle the weakest
Decide on the product with the lowest contribution margin: price, purchasing, or advertising.
Frequently asked questions
Briefly answered.
Which costs belong in contribution margin?
All costs that arise with every unit sold: cost of goods, shipping and packaging, payment and marketplace fees, return share, and ad cost per sale. Rent and salaries are not included.
At what contribution margin is a product good?
That depends on your fixed costs and volumes. What matters is whether the sum of all contribution margins covers the fixed costs. There is no single percentage that fits everyone.
Should I delist products with a low contribution margin?
Not right away. Some attract first-time buyers who later buy again profitably. Check price, purchasing and advertising first; delisting is the last step.
Keep exploring
What's included.
- FunctionMargin & contribution marginContribution margin per product and variant, with scenarios and inventory.View
- Software categoryContribution margin softwareKnow what's left per product after all variable costs.View
- Use caseLaunch a new offerDevelop a new service package, teach it to the team, and introduce it to customers.View
- ProblemGood ROAS without profitThe campaigns look good, but after all costs nothing is left.View
- ProblemCapital tied up in stockThe warehouse is full, the account is empty, and nobody knows how much stock is too much.View
- ProblemRevenue without profitMore revenue, but hardly anything is left at the end of the month.View
✦ A Peak principle
Understand before changing. Then every step counts.
Peak learns with you
More problems
Typical bottlenecks in growing companies, each with a tool you can try right away, the causes, and the path Peak One provides for it.
Solve it once. The rest follows.
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