Analytics Recipe Cookbook - Summaries

 View Only

Product Contribution Margin

  • 1.  Product Contribution Margin

    DIRECTOR EMERITUS
    Posted 10-20-2016 04:56 PM

    Introduction: Product Contribution Margin is one of the most important retail and ecommerce KPIs as it measures how different products and/or categories are contributing to cover the fixed expenses and the profitability of the business.

    Analysis Overview:

    If your organization sells products on it website and/or in retail stores, Contribution Margin is an important KPI. The metric is based on sales data, your product taxonomy, product, shipping, and payment costs, and your marketing spend. Most likely this data will have to be gathered from different sources and analyzed in a spreadsheet or BI tool. The recipe can also be applied to non-product businesses using similar data points that are unique to the business.

    Analysis Benefits:

    1. Compare category and product performance on a normalized basis
    2. Understand the impact of marketing on profitability
    3. Understand the intersection of product profitability and customer segments

    DAA Members, view full recipe.

    ------------------------------
    Casey Carey
    Director, Google Analytics Marketing
    Google (Corporate Account)
    ------------------------------
    2020 compensation survey now open