Why do my orders look profitable but still don't cover all costs?

Gross margin omits marketing spend payment fees and return allowance — variable selling costs that are real per-order costs but sit below the gross margin line in standard financial reporting.

The distortion lives in the accounting convention that places marketing spend as an operating expense below the gross margin line — creating a systematic visibility gap between product economics and business economics at the per-order level.

Paid acquisition cost per order is rising eleven percent while gross margin improves only two percent — the Gross-to-Contribution Gap widens with each period as marketing costs compound faster than product cost improvements can offset.

Scaling acquisition into contribution-negative channels generates a contribution deficit that grows proportionally with revenue — a ten thousand order program at negative five dollars contribution produces fifty thousand dollars per month in operating loss invisible in the gross margin view.