An explicit €10,000 revenue waterfall
Illustration, not customer results: product revenue is €10,000 after discounts and matched refunds, excluding tax and shipping income. Deduct €4,000 merchandise cost aligned with those sales, €300 payment fees, €700 fulfilment and delivery costs, and €500 return handling. Contribution before marketing is €4,500 (45%). Deduct €2,000 paid media, excluded from the earlier costs, to obtain €2,500 (25%) after marketing. Fixed overhead and other excluded costs remain; €2,500 is not net profit.
| Calculation step | Amount (€) |
|---|---|
| Revenue after discounts and matched refunds | 10 000 |
| Merchandise cost | −4 000 |
| Payment fees | −300 |
| Fulfilment and delivery | −700 |
| Return handling | −500 |
| Contribution before marketing | 4 500 |
| Paid media, not included above | −2 000 |
| Contribution after marketing | 2 500 |
Illustrative amounts in euros. The €2,500 remainder still has to cover excluded costs; it is not net profit.
Define the revenue before subtracting costs
Start with product revenue after agreed discounts and matched refunds. State whether tax and shipping income are excluded or handled separately. Do not subtract refunds again if the source already reports net revenue. A revenue label from one platform may not mean the same thing in another; reconcile a small order sample before extending the calculation.
Use one period or one defined order cohort. A cohort view can include later refunds from the same orders; a calendar view can include refunds from earlier orders. Both can be useful, but mixing their inputs makes a margin comparison hard to interpret. Record the data cutoff and how still-open returns are treated.
Build a cost dictionary before the waterfall
For each cost, record its source, unit, timing and allocation rule. Candidate lines include merchandise cost, payment fees, pick-and-pack, delivery subsidy and return handling. Their classification depends on your operation and reporting purpose. Do not assume every warehouse or agency invoice varies with each order. Separate missing costs from confirmed zero costs.
Match merchandise cost to the revenue treatment. For a returned item, record whether it is resaleable, written off or awaiting inspection; do not count both a full unreversed product cost and the same write-off as separate losses. Show any allocated shared cost transparently rather than presenting it as a directly measured order cost.
Show marketing as an explicit layer
A team may review contribution before marketing and then deduct an agreed marketing cost base. Name both subtotals and prevent double counting. If paid media is already inside the chosen variable-cost total, do not deduct it again. A blended business view also differs from assigning all shared marketing costs to the orders a platform happens to attribute.
Use the result to ask a better question
Compare collections only when their definitions and observation periods match. Investigate whether changes come from price, discounts, returns, costs or mix. A positive contribution does not show that fixed overhead, financing or other excluded costs are covered. The next action should name the uncertain cost or operational issue, its owner and the evidence needed before changing price or spend.
Use this at work
- Confirm revenue after discounts and matched refunds.
- Name every cost source and allocation rule.
- Show marketing once and label both subtotals.
- Keep excluded costs and uncertain inputs visible.
Reference material
Platform guidance checked 3 October 2026. Examples and working checklists are Faccelerate editorial illustrations.