Contribution Margin Calculator
Calculates revenue remaining after variable costs to show what covers fixed costs
Revenue earned per unit sold
Direct cost to produce or acquire one unit
Enter units to see total contribution margin
Selling price minus variable cost
Margin as a percentage of selling price
Enter units sold to see total margin
Frequently Asked Questions
What is contribution margin?
Contribution margin is the amount of revenue left after subtracting variable costs. It shows how much each unit sold contributes toward covering fixed costs and generating profit. Higher contribution margins mean more financial flexibility.
How is contribution margin different from gross margin?
Contribution margin subtracts only variable costs (costs that change per unit). Gross margin subtracts all cost of goods sold, which may include some fixed production costs. Contribution margin is more useful for pricing and break-even decisions.
What is a good contribution margin ratio?
It varies widely by industry. Software companies may see 80-90%. Manufacturing might be 30-50%. Retail is often 20-40%. The key is that your total contribution margin must exceed your fixed costs to be profitable.
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