Contribution margin per unit measures the profit contribution generated by a single unit sold after variable costs. In ecommerce operations, it provides a unit-level view of profitability that supports pricing and inventory decisions.

Contribution margin per unit is also referred to as unit contribution; this article uses “contribution margin per unit” consistently.

Contribution margin per unit represents the revenue from one unit sold minus the variable costs associated with that unit. It expresses profitability at the most granular level.

In ecommerce, unit-level contribution is critical because costs often scale per unit. Fulfillment fees, shipping, packaging, and marketplace commissions directly impact unit economics.

This metric allows teams to compare products with different price points, costs, and channels on a consistent basis.

Contribution margin per unit is especially important for ecommerce brands and aggregators managing large SKU catalogs and variable cost structures.

Shopify-based brands use unit contribution to assess free shipping thresholds, discounts, and bundle strategies.

Amazon and Walmart 3P sellers rely on unit contribution to evaluate whether sales volume is generating real profit after marketplace fees.

Multichannel ecommerce teams use contribution margin per unit to prioritize inventory investment toward the most profitable SKUs.

Contribution margin per unit is calculated by subtracting per-unit variable costs from the unit selling price. Costs must be accurately allocated by channel and fulfillment method.

This metric is often combined with expected sales volume to estimate total contribution, guiding inventory and purchasing decisions.

Low unit contribution products may still be viable if volume is high and inventory turns quickly, while high unit contribution products justify stronger availability protection.

In practice, contribution margin per unit supports pricing, assortment rationalization, and inventory prioritization.

Inventory turnover interacts with unit contribution to determine total profit generation over time.

Sell-through rate shows whether high-contribution units are actually selling as planned.

Weeks of supply should be tighter for low-contribution products to reduce capital risk.

Fill rate should be protected for high unit contribution SKUs where lost sales have outsized profit impact.

Together, these metrics align unit economics with inventory execution.

Is contribution margin per unit better than contribution margin percentage?
They answer different questions; per unit is better for inventory decisions.

Can unit contribution vary by channel?
Yes. Fees and fulfillment costs differ by channel.

Should unit contribution drive inventory allocation?
Yes, alongside demand and service considerations.

Can discounts turn positive unit contribution negative?
Yes, if pricing drops below variable cost coverage.

How often should unit contribution be recalculated?
Whenever prices, fees, or fulfillment costs change.