Start with contribution margin, not revenue
Use contribution margin to judge whether selling more units helps or hurts the business before fixed costs.
Contribution margin is the money left after the variable costs of one additional sale are paid. That leftover is what covers fixed costs and, after that, profit. This is the core operating lens in unit economics because it answers the question revenue cannot answer: does one more sale improve the business? A growing company can still be making each transaction worse if discounts, fulfillment, servicing, or commissions consume nearly everything. Treat contribution margin as the first truth layer. If it is weak, growth compounds the weakness. If it is strong, then scale has something solid to build on. That is…
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