Contribution margin is key metric!

Stop celebrating gross margin. It's a vanity metric for dtc. Gross margin is what you tell your board. Contribution margin is what you use to run your business. If you're making decisions on gm, you're making decisions on incomplete data. Here's why Gross margin misleads. It ignores fulfillment. The 70% GM product might cost $8 to ship. Now it's a different story. It ignores returns. Your premium products with 75% GM has a 15% return rate. Those returns have real cost. It ignores acquisition. Some products require $30 to acquire customer. Others sell themselves. GM treats them the same. It ignores a payment. Processing 2.9% at $0.30 per transaction adds up. GM ignores it and the shift. Report GM to investors and on your P and L. Then run your business on cm. Make inventory decisions on cm, make marketing decisions on CM and make pricing decisions on cm. GM is accounting. CM is operations. Know the difference. Next time someone celebrates a high margin product, ask gross margin or contribution margin. Watch the conversation change. Save this. Change how your team talks about profitability.