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Business · Tool

Contribution Margin Calculator

Determine how much revenue remains after variable costs to cover fixed expenses and generate profit — essential for pricing decisions.

Total Revenue
$
Variable Costs
$
Units Sold
Price per Unit
$
Margin Ratio0%
Variable Cost Ratio0%
Per Unit—
Contribution Margin
$ 0.00
PNG · made in your browser, nothing uploaded
Industry use cases
E-Commerce Product Pricing Online retailers determine which products are profitable after shipping and fulfillment costs to optimize their catalog.
Restaurant Menu Pricing Restaurant managers identify which menu items generate sufficient profit after food costs to maintain on their menu.
Manufacturing Break-Even Factory managers calculate production volume needed to cover both variable and fixed costs to plan profitably.
SaaS Customer Profitability SaaS founders evaluate whether subscription pricing covers per-customer support costs to achieve profitability targets.
Frequently asked questions
What is contribution margin and why is it important?
Contribution margin is revenue minus variable costs—the amount remaining to cover fixed expenses and profit. It is critical for pricing decisions and profitability analysis.
What is a good contribution margin ratio?
Most healthy businesses target 30-50%, though it varies significantly by industry. Higher ratios mean more profit is generated from each sales dollar.
Can contribution margin be negative?
Yes. A negative contribution margin means variable costs exceed revenue, indicating each sale loses money and the business cannot cover fixed costs.
Is contribution margin the same as profit?
No. Contribution margin subtracts only variable costs from revenue. Profit is calculated by further subtracting fixed costs. Contribution margin shows what remains to cover fixed expenses.
How do I use contribution margin for pricing decisions?
Set your price well above variable cost per unit to create margin that covers fixed costs and desired profit. Higher contribution margins provide more flexibility and resilience.
Related in Business
Receivables Turnover Ratio → Margin Calculator → Operating Cash Flow Ratio → Fixed Charge Coverage Ratio (FCCR) →
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