Contribution Margin Calculator
Contribution margin is what is left from each sale after the costs that rise with each unit are paid. That money goes toward fixed costs first, and then toward profit. Enter a price and its variable cost to see it.
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- Works offline after your first visit
- Saves on this device
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- Updated
How it works
Contribution per unit is the price minus the variable cost. The contribution margin is that amount divided by the price, times 100.
Variable costs usually include materials, packaging, shipping and sales commissions. Fixed costs such as rent are not taken off here.
Worked example
A unit sold for $40.00 with $25.00 of variable cost leaves $15.00 to cover fixed costs, a contribution margin of 37.5%.
Questions
How is this different from gross margin?
Gross margin subtracts the cost of goods sold, which can include some fixed costs. Contribution margin subtracts only the costs that move with each unit.
Why does it matter?
It shows how much each extra sale helps pay the fixed costs, which is useful when you set prices or plan volume.
Can I use it for a whole product line?
Yes. Use average figures for the line, and check that the variable costs are right for each product.
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