Contribution margin
What an order leaves after the costs it brings.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: contribution margin.Updated 2 October 2026
Part of technology company financial models, with the models, labs and guides around it.
What it does
What each order leaves after the costs that come with it. Payment processing and refunds scale with the value of the order, support and operations with the number of orders; what is left of net revenue is contribution, quoted per order and as a share of GMV. Marketing buys next year’s buyers and fixed costs run the platform, so both sit below contribution, and the gap between them is where a marketplace’s operating leverage shows.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 29–34: Payment processing, % of GMV, Refunds and trust and safety, % of GMV, Customer support and operations per order ($), Technology, product and G&A, FY1…
- Contribution, rows 6–12: Payment processing, Refunds and trust and safety, Customer support and operations, Contribution…
- Contribution, rows 15–19: Marketing: new buyers x cost per new buyer, Technology, product and G&A, EBITDA, EBITDA as a share of net revenue…
What a reviewer looks for
- Support costs left out of contribution.
- Marketing deducted per order rather than per new buyer.
- An EBITDA margin quoted on GMV beside one on revenue without saying which.
Learn it, then build it
Build · Lab · ~12 min
Marketplace Economics
Turn GMV into net revenue and contribution per order, read a cohort’s GMV retention from retention and frequency, and find the payback year on a buyer.
Read · Guide · 11 min
SaaS Operating Models: ARR, Sales Capacity, Billings and the Metrics That Follow
Vocabulary: Contribution Margin, Take Rate.