Contribution Margin Calculator
Contribution margin is what one more sale leaves in the business. At a price of 15,000 with 6,000 of variable cost, 9,000 is left, and dividing by the price gives a 60% contribution ratio. With the ratio you can find the revenue you need without counting units at all: 3,000,000 of fixed costs over 0.6 is 5,000,000. For a shop with dozens of different items and no single unit to count, the ratio route is the only one available.
Your numbers
Contribution each
9,000
Contribution ratio
60%
Break-even units
334
Formula
Contribution each = Price − Variable cost each, Contribution ratio = Contribution each ÷ Price × 100
Contribution margin is not profit. It is measured before a single unit of fixed cost has been paid, so it can look comfortable while the business as a whole loses money.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| PriceThe amount being charged. Decide first whether it is before or after tax. | 15,000 | 0 and up |
| Variable cost eachCost that only appears when one more unit sells — materials, packaging, payment fees. | 6,000 | 0 and up |
| Fixed costsMoney that goes out whether you sell or not — rent and salaries live here. | 3,000,000 | 0 and up |
Step by step
Quick reference table
Results when only Price changes and everything else stays put.
| Price | Contribution each | Contribution ratio (%) | Break-even units |
|---|---|---|---|
| 7,500 | 1,500 | 20 | 2,000 |
| 11,250 | 5,250 | 46.7 | 572 |
| 15,000 | 9,000 | 60 | 334 |
| 22,500 | 16,500 | 73.3 | 182 |
| 30,000 | 24,000 | 80 | 125 |
What each result means
| Result | At default values |
|---|---|
| Contribution eachWhat one more sale leaves in the business — this is what pays down fixed costs. | 9,000 |
| Contribution ratio (%)Contribution over price; when units cannot be counted, this gets you the revenue. | 60 |
| Break-even unitsThe quantity that exactly covers fixed costs; one short and you are in the red. | 334 |
Common mistakes
Contribution margin is not profit. It is measured before a single unit of fixed cost has been paid, so it can look comfortable while the business as a whole loses money.
Glossary
- Price
- The amount being charged. Decide first whether it is before or after tax.
- Variable cost each
- Cost that only appears when one more unit sells — materials, packaging, payment fees.
- Fixed costs
- Money that goes out whether you sell or not — rent and salaries live here.
- Contribution each
- What one more sale leaves in the business — this is what pays down fixed costs.
- Contribution ratio
- Contribution over price; when units cannot be counted, this gets you the revenue.
- Break-even units
- The quantity that exactly covers fixed costs; one short and you are in the red.
Frequently asked questions
Q. How is Contribution Margin Calculator calculated?
Contribution each = Price − Variable cost each, Contribution ratio = Contribution each ÷ Price × 100 — Contribution margin is what one more sale leaves in the business. At a price of 15,000 with 6,000 of variable cost, 9,000 is left, and dividing by the price gives a 60% contribution ratio. With the ratio you can find the revenue you need without counting units at all: 3,000,000 of fixed costs over 0.6 is 5,000,000. For a shop with dozens of different items and no single unit to count, the ratio route is the only one available.
Q. Can you walk through an example?
With Price 15,000, Variable cost each 6,000, Fixed costs 3,000,000, the answer is Contribution each 9,000.
Q. What do I need to enter?
Enter Price, Variable cost each, Fixed costs. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Price moves the answer to Price 7,500 → Contribution each 1,500 and Price 30,000 → Contribution each 24,000. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
Contribution margin is not profit. It is measured before a single unit of fixed cost has been paid, so it can look comfortable while the business as a whole loses money.
Related calculators
Tax rates and interest conventions differ by country and product — check your contract for real transactions.