Use margin to make better marketing decisions
Understand revenue, gross margin, contribution profit and break-even ROAS. Includes a worked bundle example and a simple decision worksheet.
By Studio24 · Published 30 September 2026 · 2 min read
Revenue is the beginning of the calculation
A campaign with positive revenue can still lose money. Start by listing the costs attached to fulfilling a sale: product cost, packaging, delivery subsidy, payment fees and expected returns. Then account for campaign spending and business overhead separately.
Gross margin and contribution margin depend on the costs you include. State the definition whenever comparing products or channels. Do not label the amount remaining after product cost as net profit.
A worked bundle
Suppose a mug costs £8 and coffee beans cost £4. The bundle sells for £35, with £4 shipping cost absorbed by the business. That leaves £19 before payment fees, returns, tax and overhead. The apparent bundle value is useful only if the remaining contribution fits the business.
Discounting from the separate item prices can be reasonable when the bundle solves a complete customer job. Test whether more people buy it and whether contribution profit per visitor improves. AOV alone is not enough.
Calculate a useful advertising threshold
If pre-ad contribution margin is 60%, each £1 of revenue leaves £0.60 for advertising and other costs already excluded from that margin. Covering £1 of ad spend therefore requires about £1.67 of revenue: 1 divided by 0.60.
This break-even ROAS covers advertising and the variable costs included in the margin. It does not cover omitted overhead or a desired profit buffer. Add those considerations before treating the threshold as a spending target.
Write down the decision
For each proposed campaign, record the offer, price, direct costs, expected contribution, acquisition channel and spending limit. Replace assumptions with observed numbers as soon as possible. Review refunds and service workload as well as sales.
Use the free margin, ROAS and CAC calculators to check arithmetic. The tools evaluate the inputs you provide; they do not validate your attribution, forecast demand or decide what the business should spend.
Put the brief to work.
Open the product bundle generator or follow the Ecommerce Listing Kit. Three standard text drafts are free with an account.