Explain contribution margin by product and channel.
What every product and channel really keeps, with each cost in the margin and each estimate labeled, so decisions rest on the closed books.
- Product
- Fulfillment, fees and returns
- Ads or commission
- Left over
October closed · net sales $41,000 in each channel
One jacket, two channels, one October. Same net sales, very different amounts left over.
Sound familiar?
- The dashboard says 31%, and the books say something else.
- Sales are up, and nobody can say which products or channels pay for it.
- A freight bill lands after the decision was made.
Spend follows the number on the screen. If that number is an estimate, you scale the channel that loses money.
Fernway’s October close, product by product
Forty-eight products sold in October.
Every product and channel that took an order: Shopify, TikTok Shop and wholesale.
Forty-one have every cost in.
Fulfillment, fees, returns, ads and commission, found for each. The other seven are missing a bill, and say so.
Forty are trued up to actuals.
Estimates are replaced by what really happened, and the old estimate is kept beside it. One waits on a dispute.
Twelve led to a decision.
Each has an owner and a date to check: a commission rule, a price review, a dispute.
TikTok Shop was 12%, not 31%.
The Canvas jacket on TikTok lifts out as the margin table that finance and growth now share.
| Product · channel | Dashboard | Closed books | Decision |
|---|---|---|---|
| Canvas jacket · TikTok | 31% | 12% | Cut commission |
| Canvas jacket · Shopify | 31% | 30% | Keep scaling |
| Waxed jacket · Shopify | — | 14% | Review price |
| Trail pant · TikTok | — | Estimate | Wait for bill |
Overhead is left out of every figure
What changes.
- The number
- An estimate on standard costsEstimate and actual kept side by side, each labeled
- Costs
- Whatever the dashboard could seeFulfillment, fees, returns, ads and commission, by product and channel
- Late costs
- Found after the decisionFlagged as incomplete, with the bill’s owner
- Next step
- A chart and a debateA decision with an owner, and a date to check it
How it works. 5 steps, 4 stages.
- AI1
- Rules and automation2
- Your team2
- Approval
1Gather
Rules and automation
Pull sales and every cost line
Orders, returns, 3PL bills, payment fees, ad spend and affiliate commission, joined by product and channel.
- Shopify
- TikTok
- ShipBob
- NetSuite
2Cost
Your teamApproval
Agree the definition
Finance signs off what counts in contribution, and which overhead is left out.
Rules and automation
Apply the approved cost versions
Each figure says whether it’s estimated or actual, and which costs are still missing.
3Explain
AI
Explain what moved
Compares slices, reads the supporting invoices and drafts competing explanations. It doesn’t name a cause the numbers can’t support.
4Decide
Your teamApproval
Decide, with an owner
Pricing, promotion and media belong to the people who run them. Each decision is logged with a date to check.
Actuals true up the next estimate
What you get. Real work, every week.
| Product · channel | Dashboard | Closed books | Decision |
|---|---|---|---|
| Canvas jacket · TikTok | 31% | 12% | Cut commission |
| Canvas jacket · Shopify | 31% | 30% | Keep scaling |
| Waxed jacket · Shopify | — | 14% | Review price |
| Trail pant · TikTok | — | Estimate | Wait for bill |
Overhead is left out of every figure
The margin table finance and growth share. Estimates and actuals sit side by side, and incomplete costs say so.
- Affiliate commissionStandard $0 · actual $6,150+$6,150Landed at close
- FulfillmentStandard $4,500 · actual $5,200+$700Landed at close
- ReturnsStandard $3,890 · actual $4,400+$510Landed at close
- Platform and payment feesStandard $2,900 · actual $3,300+$400Landed at close
31% estimated ($12,710) became 12% ($4,950), a difference of $7,760
Why the dashboard was wrong: the costs that landed at the close, kept beside the standard costs they replaced.
Cut affiliate commission to 10% on low-margin products.
- Why
- TikTok Shop keeps 12%, not the 31% the dashboard estimated
- Change
- Commission from 15% to 10% on low-margin products
- Check
- At the November close, December 7
The decision that followed, with its owner and the date to check it.
How you’ll know it’s working.
Time from a margin movement to a decision
The gap between seeing a change and acting on it.
Material slices with every cost in
Products and channels that were invisible before now show their real margin.
Decisions completed, and what they changed
Contribution after variable costs, measured at the next close.
Baselines agreed before we build.
Works with what you have.
Commerce
- Shopify
- NetSuite
Ads
- TikTok
Fulfillment
- ShipBob
Measurement
- Triple Whale
Accounting
- A2X
Planning & BI
- Power BI
- We configure first
- Tools like A2X Clarity and Triple Whale can already show contribution from your orders and costs. We check what they include, and which costs are missing, before building anything.
- We build when
- A margin has to include costs no dashboard sees, like landed freight, returns and retailer allowances, and has to agree with your books.
What a first build includes.
Built in your accounts, around your team. Scope, fee and baseline agreed before we start.
- 1Design
- 2Build
- 3Run it, or hand it over
We build
- A contribution view by product and channel
- Cost definitions finance approves, with versions
- Estimate-to-actual true-ups, with the difference kept
- A decision log with owners and dates to check
We start from
- Orders, returns and refunds
- Product costs, 3PL and carrier invoices
- Ad spend and affiliate commissions
From your team
- Owner
- Finance lead, with the head of growth
- Involves
- Finance
- Growth
- Merchandising
- Operations
Questions teams ask.
Is contribution margin the same as profit?
No. Contribution is what’s left after the costs that vary with each sale. Overhead isn’t in it, and we name what’s left out. The daily figure is an estimate until the close trues it up.
Our dashboard already shows margin. What’s missing?
Often the costs nobody owns: landed freight, returns handling, retailer allowances and late bills. We check what your dashboard includes, then add the missing costs, or the flag that says they’re missing.
Who decides what to do about a weak channel?
The people who run it. Finance owns the definitions, and growth, merchandising or operations own the pricing, promotion and media calls. We log each decision with an owner and a date to check.
Who owns it once it’s running?
You do. It’s built in your accounts, documented, with training for the people who run it. Ownership usually sits with your finance lead, with the head of growth. We can keep running it with you, or step back.
How do we start?
Usually with a finance review: two to four weeks, a fixed fee credited to the build, and a plan that’s yours. If the job is already clear, we can scope the build directly.
Part of your finance engine. One of 11 use cases, in 5 parts.
See the whole finance engineIn margin
- Contribution diagnosisYou’re here
- Landed costPut true landed cost into every margin number
Works with
Know what each channel really earns. Start with a finance review.
We reply within one business day.