Track Contribution Margins with Taylor Holiday
Description
Keeping it simple, Taylor recommends setting a contribution margin target, and tracking it every single day to watch your bank account grow. It’s your Net Sales with Ad Spend and Cost of Delivery subtracted. Since Cost of Delivery includes everything like COGS, Payment Fees, Fulfilment and Shipping, it’s a great metric to rally a team around because it blends lots of your business activities into one.
Improvements can be made by managing and optimizing costs associated with delivery, including COGs, payment fees, and shipping.
Read more in the original Twitter thread.
Why it's important
The contribution margin is defined as the difference between net sales and the sum of cost of delivery and ad spend. It's a key metric in determining a company's profitability.
How to improve it
As Taylor puts it: "Set a goal for contribution margin. Track it every day. Grow your bank account."
Preview of the template
