Contribution Margin Calculator
Shows how much each sale contributes towards fixed costs and profit.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
contribution per unit = price − variable cost ratio = contribution per unit ÷ price profit = contribution per unit × units − fixed costs
Contribution is what each sale leaves to pay for fixed costs. Once those are covered, the rest is profit.
What to watch out for
For break-even units and revenue, enter the same price, variable cost and fixed costs in the break-even calculator.
Frequently Asked Questions
How do I calculate contribution margin?
Take the variable cost from the price. A price of 50 and a variable cost of 30 give 20 per unit, a ratio of 40%.
How is it different from gross margin?
Contribution margin takes off only the costs that change with sales. Gross margin takes off the cost of goods sold, which can include some fixed production costs.
How does it give break-even?
Divide fixed costs by contribution per unit. Fixed costs of 20,000 at 20 per unit break even at 1,000 units.