₹1 Lakh Store
⌘K
GETTING STARTED
FIND — Get an Idea
VALIDATE — Hit PMF (Phase 3)
UNIT ECONOMICS — First (Phase 4)
    • Contribution Margin Model
    • COGS Breakdown Sheet
    • Break-Even Calculator
    • Gross Margin Benchmarks
    • Shipping Cost Optimization
    • Platform Fee Comparison
    • Price Sensitivity Testing
    • LTV:CAC Framework
    • Scenario Planning Tool
SCALE — Build to ₹1L/mo
AI & AUTOMATION
ANALYTICS & DATA
FINANCE
TOOLS & CALCULATORS
RESOURCES
  1. UNIT ECONOMICS — First (Phase 4)
  3. Contribution Margin Model

07 — Unit Economics

Contribution Margin Model

Contribution margin is the single most important number in D2C. If it's below 40%, you can't scale profitably.
40%+ Target CM3x Markup Rule₹200-350 CM/Order60%+ Best-in-Class

40%+

Target CM

Minimum for profitability

3x

Markup Rule

Selling price = 3x COGS

₹200-350

CM Per Order

Healthy range for D2C

60%+

Best-in-Class

Top Indian D2C brands

Contribution Margin Breakdown (₹599 Product)

ComponentAmount
Selling Price₹599
Product Cost (COGS)-₹120
Inbound Shipping-₹15
Packaging-₹25
Outbound Shipping-₹55
Payment Gateway (2%)-₹12
COD Charges (avg)-₹20
Total Contribution Margin₹352 (59%)

Margin Improvement Strategies

Increase Revenue

Raise product price (test ₹699, ₹799)

Create bundles (2-pack, 3-pack)

Set free shipping threshold at ₹499

Add upsell/cross-sell offers

Reduce Costs

Negotiate COGS down with supplier

Optimize shipping (zone-based, weight)

Reduce packaging cost without hurting brand

Push prepaid orders (save COD charges)

Contribution Margin — Must Confirm