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 directly informs pricing and inventory decisions.

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

Contribution margin per unit represents the selling price of one unit minus the variable costs associated with that unit. It expresses profitability at the most granular level.

In ecommerce, many costs scale per unit rather than per order. Fulfillment fees, shipping, packaging, and marketplace commissions directly affect unit economics.

This metric allows teams to compare products with different prices, 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 discounts, bundles, and free shipping strategies.

Amazon and Walmart 3P sellers rely on unit contribution to ensure sales volume translates into real profit after marketplace fees.

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

Unit contribution is calculated by allocating all variable costs to a single unit sold. This requires accurate cost attribution by channel and fulfillment method.

Unit contribution is often combined with expected sales volume to estimate total contribution, guiding purchasing and assortment decisions.

Low unit contribution products require faster inventory turnover to remain viable, while high unit contribution products can justify stronger availability protection.

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

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

Weeks of supply should be managed tightly for low unit contribution products.

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

These metrics connect unit economics to inventory execution.

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

Can unit contribution vary by channel?
Yes, due to different fees and fulfillment costs.

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

Can discounts eliminate unit contribution?
Yes, if pricing drops below variable cost coverage.

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