How to set up unit economics and cost allocation for D2C businesses

Last updated: November 5, 2025

When setting up unit economics in StoreHero for a business that operates both B2B and D2C channels, it's important to properly allocate costs to get accurate metrics for your D2C operations.

Cost of Goods Sold (COGS)

Keep COGS focused on the direct costs to get the product to the customer:

  • Materials and manufacturing

  • Packaging

  • Inbound freight

  • Duties

Variable costs like salaries, warehouse rent, and platform fees should be moved to Business Costs rather than included in COGS.

Splitting Shared B2B/D2C Costs

Since StoreHero only pulls in B2C orders, you'll need to allocate the appropriate portion of shared costs to your D2C operations. StoreHero doesn't currently support automatic cost splitting based on drivers like order volume or revenue.

The recommended approach is to:

  1. Estimate what percentage your D2C channel accounts for in your overall business

  2. Apply that percentage to shared expenses

  3. Only include the D2C portion in StoreHero

For example, if D2C generates 60% of your total business revenue, allocate 60% of shared expenses like warehouse rent and labor to your D2C operations in StoreHero.

Platform and Subscription Fees

Platform subscription fees (like Shopify) and other business applications should be categorized as operational expenses (opex), not marketing costs. This provides a clearer view of your Customer Acquisition Cost (CAC) by keeping marketing expenses focused on actual marketing activities like:

  • Email marketing tools (Klaviyo)

  • Affiliate programs

  • Marketing agencies

  • PR and advertising

Understanding Your Metrics

Marketing Efficiency Ratio (MER) is calculated as net sales divided by marketing spend. This tells you how many dollars in sales you generate for every dollar spent on marketing, considering only marketing costs and COGS.

Contribution Margin takes into account:

  • Marketing costs

  • COGS (everything you pay to get the product to the customer)

Net Profit considers all costs including:

  • COGS

  • All marketing expenses

  • Operational expenses (opex)

  • Staffing costs

This structure ensures you get accurate insights into both your marketing efficiency and overall business profitability for your D2C operations.