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Contribution Margin Ratio Calculator

Calculate total contribution margin and the contribution margin ratio from sales and variable costs, then find the break-even revenue.

Total sales revenue

Total variable costs

Total fixed costs

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How it works

Contribution margin = revenue − variable costs · CM ratio = CM ÷ revenue × 100 · Break-even revenue = fixed costs ÷ CM ratio · Operating income = CM − fixed costs

The contribution margin ratio is the share of each sales dollar left after variable costs, available to cover fixed costs and then profit. Working with the ratio (rather than per-unit figures) lets you find break-even in revenue terms directly: divide fixed costs by the ratio. It also reveals operating leverage — a high ratio means each extra dollar of sales drops mostly to the bottom line once fixed costs are covered.

Worked example

On $200,000 of sales with $120,000 of variable costs, contribution margin is $80,000, a 40% ratio. Against $50,000 of fixed costs, operating income is $30,000 and break-even revenue is 50,000 ÷ 0.40 = $125,000.

Frequently asked questions

What is the contribution margin ratio?

It is contribution margin divided by sales revenue, expressed as a percentage. It tells you what fraction of each sales dollar is available to cover fixed costs and profit after variable costs are paid.

How does it give break-even revenue?

Divide total fixed costs by the contribution margin ratio. If fixed costs are $50,000 and the ratio is 40%, break-even revenue is $125,000 — the sales level where contribution margin exactly equals fixed costs.

Why use the ratio instead of per-unit contribution?

The ratio works for a whole product mix or a service business without needing a defined "unit". It converts fixed costs straight into a break-even sales figure, which is often the number owners care about.

Related calculators

Contribution Margin Calculator

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

Break-Even Calculator

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

Break-Even With Target Profit Calculator

Find how many units and how much revenue you must sell to cover fixed costs and hit a specific profit target.

Operating Margin Calculator

Calculate operating income and operating margin from revenue, cost of goods sold and operating expenses — plus the gross margin alongside.

Cost-Plus Pricing Calculator

Price a product by adding a markup to its fully loaded unit cost — materials, labor and overhead — and see the resulting profit and margin.

Educational estimate, not financial advice.