How Total Contribution Margin, Contribution Margin, and Lifetime Value (LTV) Help Brand Owners
Berry:Your Marketing Assistant
8 Apr 2025
5 min read
Beyond Sales: The Metrics That Truly Drive Your Brand's Growth
As a brand owner, knowing your numbers is one of the most important things you can do to grow your business. While it’s easy to focus on how many products you sell, it’s even more useful to understand how much money you actually make from each sale and each customer. This is where key metrics like Contribution Margin, Total Contribution Margin, and Lifetime Value (LTV) come in. In this blog post, we’ll explore how these metrics work and how they can help you make better decisions for your brand.
1. What Is Contribution Margin and Why Is It Important?
Contribution margin is the money you earn from selling one product after you remove the cost of making it. For example, if you sell a product for $50 and it costs you $20 to produce, your contribution margin is $30. This number is important because it shows how much profit you get from each sale. When you know the contribution margin, you can see which products are more profitable. This helps you make better choices about what to sell and how to price your products.
2. See the Big Picture with Total Contribution Margin
While contribution margin looks at just one product, total contribution margin shows how much total profit you make from all your sales. It helps you see the full picture of your business. If some products are not making enough profit, total contribution margin will show it. This way, you can understand where your money is really coming from and make smart changes to improve your overall results.
3. Use Contribution Margin to Plan Growth
Knowing your contribution margin helps you make better decisions when you want to grow your business. For example, if your profit margin is strong, you can safely invest in ads, new products, or hiring more team members. If the margin is low, you may need to improve your product or change your prices before growing. Working with real profit numbers—not just sales—helps you make smarter plans and avoid mistakes.
4. What Is Lifetime Value (LTV)?
Lifetime Value, or LTV, is the total amount of money a customer spends on your brand during their entire relationship with you. A one-time customer may only buy once, but a loyal customer might come back again and again over months or years. That means their LTV is much higher. LTV is useful because it shows how valuable each customer really is—not just at the first purchase, but over time.
5. Focus on the Right Customers with LTV
When you know which customers have the highest LTV, you can give them more attention. You might offer them special discounts, send personal messages, or invite them to try new products before anyone else. These small actions help you build strong relationships with your best customers. They already love your brand, so keeping them happy will bring more profit to your business in the long run.
6. LTV vs. Customer Acquisition Cost (CAC)
Customer Acquisition Cost, or CAC, is the money you spend to get a new customer—like through ads or promotions. If you spend more money to get a customer than what they spend with you (LTV), then you lose money. But if a customer’s LTV is higher than their CAC, that means your business is healthy and growing. Keeping a good balance between LTV and CAC is very important for success.
7. Improving Your Business Over Time with Roasberry
Using Roasberry’s dashboard, you can track your Contribution Margin, Total Contribution Margin, and LTV all in one place. These numbers are updated daily, so you can see exactly which products are performing best, where your profit is growing, and how loyal your customers are. By watching these key metrics over time, you can spot new opportunities and make small changes that lead to big improvements. Roasberry helps you focus not just on more sales, but on more profitable sales.
Final Thoughts
In today’s competitive e-commerce world, growing a brand takes more than just good products and nice packaging. You also need clear, accurate data to guide your decisions. Roasberry helps you understand the real value behind every order and every customer. With tools to measure Contribution Margin, Total Contribution Margin, and LTV, you can stop guessing and start making smarter moves. Whether you're running ads, launching a new product, or planning your next campaign, Roasberry is here to help you grow your business with confidence.