📈

Contribution Margin Calculator

Calculate contribution margin per unit, contribution margin ratio and total contribution from price, variable cost and units sold.

Selling price per unit

Variable cost per unit

Units sold

Loading calculator…

How it works

Contribution margin per unit = price − variable cost · CM ratio % = CM per unit ÷ price × 100 · Total contribution = CM per unit × units

Contribution margin is what each sale adds toward covering fixed costs after paying its own variable cost — selling price minus variable cost per unit. Expressed as a ratio (contribution ÷ price), it shows the share of every revenue dollar left over to cover overhead and, once fixed costs are met, to become profit. Contribution margin is the engine behind break-even analysis: total fixed costs divided by the per-unit contribution gives the units you must sell to break even. A higher contribution margin means each incremental sale does more work, so the business reaches profit sooner and each additional unit is worth more.

Worked example

A product priced at $50 with $30 of variable cost contributes 50 − 30 = $20 per unit — a 20 ÷ 50 = 40% contribution margin ratio. Sell 1,000 units and total contribution is $20 × 1,000 = $20,000 toward fixed costs and profit.

Frequently asked questions

What is the difference between contribution margin and gross margin?

Gross margin subtracts the full cost of goods sold, which can include some fixed manufacturing costs. Contribution margin subtracts only variable costs — those that change with each unit. That makes contribution margin the right tool for break-even and pricing decisions, because it isolates what each extra sale actually adds.

What counts as a variable cost?

Costs that rise and fall with the number of units produced or sold: materials, per-unit labor, shipping, payment-processing fees and sales commissions. Rent, salaries and insurance are fixed costs — they do not change with volume, so they are excluded from contribution margin.

How does contribution margin relate to break-even?

Break-even units = fixed costs ÷ contribution margin per unit. Each unit’s contribution chips away at fixed costs; once enough units have been sold to cover them, every further unit’s contribution is profit. A higher contribution margin means fewer units needed to break even.

Related calculators

Break-Even Calculator

Find the number of units and the revenue you need to cover fixed and variable costs — your break-even point.

Profit Margin Calculator

Turn revenue and cost into gross profit, profit margin and markup — and see why margin and markup are not the same number.

Margin Calculator

Price a product from its cost and a target profit margin — the correct way to hit a margin, not a markup.

Markup Calculator

Apply a markup to your cost to get the selling price, profit and the resulting profit margin.

Average Order Value Calculator

Calculate average order value (AOV) from total revenue and number of orders — how much a typical customer spends per purchase.

Educational estimate, not financial advice.