State the assumptions
Assume revenue excluding collected taxes is 100 currency units. Product cost is 35, packing and dispatch 5, merchant-funded shipping 12, payment fees 3 and allocated acquisition cost 20. These figures are teaching assumptions, not average costs, provider quotations or a profit promise.
Calculate the remainder
The simplified contribution is 100 − 35 − 5 − 12 − 3 − 20 = 25. It does not yet include payroll, premises, software, returns or other applicable costs. Calling it net profit would be misleading.
Check sensitivity
With other assumptions unchanged, another 10 in acquisition cost leaves 15. An additional 5 in shipping leaves 10. This illustrates why a sales dashboard alone cannot describe the quality of growth.
Connect the model to cash
Record when inventory, ads and other bills are paid and when customer funds settle. A positive contribution does not necessarily mean cash is available for another purchase order. Review the actual accounting treatment with your finance team.
