Jacob Baadsgaard (Founder & CEO of Disruptive Advertising) shows how to determine and track the contribution margin in order to make the marketing initiatives profitable. Basically contribution margin is the difference between the amount of money made from the sale and the variable cost associated with that sale. The easiest way to predict the success of the marketing efforts is by following the rule of thumb.
§ 1X contribution margin:- making extreme loses
§ 2X contribution margin:- making losses
§ 3X contribution margin:- breaking even
§ 4X contribution margin:- starts making profit