₹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. Unit Economics & Pricing

Phase 4 of 13 — Unit Economics · Days 36-42 (Do This Before Brand/Legal/Supply/Store)

Know your numbers to the rupee

If you don't know your contribution margin, you don't know if your business works. Most D2C founders launch without understanding unit economics — and then wonder why they're losing money on every order. Get this right before you spend a single rupee on ads.
Pricing StrategyMargin AnalysisCAC PlanningContribution Margin

3x+

Minimum Markup

Selling price vs product cost

40%+

Target Margin

Contribution margin goal

₹400-799

Sweet Spot AOV

Optimal price range for D2C

<₹300

Target CAC

First 3 months customer acquisition

If your contribution margin is below 30%, you cannot scale profitably. Every rupee you spend on ads will lose money. Fix pricing or cut costs before launching — there's no amount of volume that fixes bad unit economics.

Unit Economics Calculator

Selling Price₹599.00
Product Cost−₹150.00
Shipping−₹60.00
Packaging−₹25.00
Payment Gateway (2.36%)−₹14.14
Contribution Margin₹349.86 (58.4%)
RTO Loss (15% rate)−₹46.37
Margin After RTO₹303.49 (50.7%)
Marketing CAC−₹0.00
Net Profit/Order₹303.49
✓ Healthy margins — you can scale profitably

Gateway fee includes 2% + 18% GST. RTO loss = shipping both ways + product cost + packaging + gateway fee, averaged across all orders.

How to use: Enter your selling price, product cost, shipping, packaging, and target CAC. The calculator shows your contribution margin and net profit per order. Aim for 40%+ contribution margin and ₹100+ net profit per order.

>₹100

net profit per order — the minimum viable target

Below this, you can't cover fixed costs and still grow

Pricing Tiers — Where D2C Makes Money

TierPrice RangeTypical MarginCAC RangeVerdict
Entry₹199-39915-25%₹80-150Tough
Mid₹400-79930-50%₹150-300Sweet Spot
Premium₹800-1,49940-60%₹300-600Strong
Luxury₹1,500+50-70%₹500-1,500High Risk
The ₹400-799 sweet spot: High enough margin to absorb CAC + RTO, low enough for impulse purchase. Most successful Indian D2C brands price in this range.

Markup Multiplier — Why 3x Minimum?

The Math Behind 3x Markup

Product Cost: ₹120

Selling Price (3x): ₹360

Shipping: -₹55

Packaging: -₹25

Gateway Fee (2.36%): -₹8.50

RTO Provision (10%): -₹26.35

RTO = shipping both ways (₹110) + product (₹120) + packaging (₹25) + gateway (₹8.50) = ₹263.50 per returned unit. Averaged at 10% RTO rate.

Contribution Margin: ₹125.15 (34.8%)

CAC Budget: ₹80-150

Net Profit: ₹0-45 per order

What Happens at 2x Markup

Product Cost: ₹120

Selling Price (2x): ₹240

Shipping: -₹55

Packaging: -₹25

Gateway Fee (2.36%): -₹5.66

RTO Provision (10%): -₹26.07

Same formula as above: ₹260.66 per returned unit, averaged at 10%.

Contribution Margin: ₹8.27 (3.4%)

CAC Budget: None — you cannot run paid ads

Net Profit: -₹90+ per order if you spend ₹100 on CAC

At 2x markup, your CM is only ₹8. Any ad spend at all destroys profitability. That's why 2x markup is a death trap for D2C.

Contribution Margin Breakdown — ₹599 Product Example

ComponentAmount% of RevenueNotes
Selling Price₹599100%Your MRP
Product Cost₹120-15020-25%Supplier price + QC
Shipping₹55-659-11%500g Zone B via aggregator
Packaging₹20-303-5%Mailer + thank you card
Payment Gateway₹14.142.36%2% + 18% GST (Razorpay/Cashfree)
RTO Buffer₹27-304.5-5.0%Shipping both ways + product + packaging + gateway, averaged at 10% RTO rate
Contribution Margin₹320-35553-59%Healthy
Marketing (CAC)₹150-30025-50%Meta/Google ads
Net Profit/Order₹100-20017-33%Target

3x

minimum markup — anything less and you're building a hobby, not a business

At 3x markup you have room for CAC, RTO, and still profit per order

CAC Benchmarks — Indian D2C

ChannelCAC RangeQualityRecommendation
Meta (FB + IG)₹150-400Good targetingPrimary
Google Ads₹200-500High intentSecondary
Influencer₹100-300VariableTest
WhatsApp₹50-150Warm leads onlyRetention
Organic/Social₹0-80Slow but freeLong Term
Phase 7 Completion Checklist

Sources: Indian D2C Pricing Benchmarks 2024, Razorpay D2C Report, Meta CAC Benchmarks India

Next Step

Ready to move forward? Continue to Phase 8.

Phase 8: Operations →