Understand the decision
Revenue is the amount sold on a stated accounting basis. Net receipts account for refunds and adjustments. Contribution subtracts the variable costs required to deliver the sale. Fixed costs and acquisition may still remain. A product can have growing revenue and still lack enough contribution to support the business.
For an illustrative sale bringing $100 after refunds, with $35 in payment, inference, and variable delivery costs, contribution before acquisition is $65. If acquiring that customer costs $40, $25 remains before fixed costs. Keep the currency and period consistent, and do not subtract the same support or delivery expense twice.
Put it to work
List measured inputs separately from assumptions. Keep founder time visible even when cash spending is zero. Pick a payback window you can fund and compare acquisition cost with contribution within that window. Do not assume an unobserved lifetime of renewals makes an expensive campaign affordable.
Use a range where costs or retention are uncertain. Ask what happens if support doubles or the next renewal does not occur. If contribution or attribution is unknown, record the gap and investigate it. A missing value must not become a convenient zero.
Common mistake
Calling ROAS profit, mixing periods, or using speculative lifetime value to justify current spending.
Put this to work
Write the inputs, uncertainty, payback window, and stop rule. Then solve the contribution scenario.
Sources and further study
Original teaching informed by public material. These authors do not teach, endorse, or certify the RevStart course.
This lesson uses original RevStart definitions and illustrative arithmetic. Accounting assumptions must match your business.