Margin
E-commerce
E-commerce
Margin is what's left of a sale after direct costs. It's the number that decides how much you may spend on marketing.
Gross margin is revenue minus cost of goods and direct costs. Net margin also subtracts overhead and staff.
Marketing decisions without a margin figure are guesswork: the same ROAS means something completely different across two product groups.
Related terms
- ROIROI is the return on an investment: revenue minus cost, divided by cost. In marketing you should work from margin, not revenue.
- Break-evenBreak-even is the point where revenue and costs are equal. In advertising you translate that into a break-even ROAS or a maximum cost per order.
- Average order valueAverage order value is revenue divided by number of orders. Alongside traffic and conversion rate it's the third lever you can pull.