Metrics
Gross margin
Revenue minus COGS, expressed as a percent.
Gross margin is the percent of revenue left after cost of goods sold. For a $100 AOV product with $40 COGS + fulfillment, gross margin is 60%. Margin is the upper bound on what you can pay to acquire — your breakeven CPA equals AOV × margin. Operators in low-margin verticals (drop-ship e-com, 30–40% margin) are forced into LTV plays; high-margin verticals (info products, 80%+ margin) can outbid everyone on first-purchase.
Example
ClickBank info-product at $97 AOV, 75% network commission, 90% gross margin upstream → affiliate effective margin is the commission rate minus refunds (~10%). Net 65%.