Contribution Margin Calculator
See how much each sale contributes towards fixed costs and profit.
What this calculator does
The part of each sale left after the variable cost of making it. Direct subtraction and division of the entered price and cost.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Selling price per unit
- — number value.
- Variable cost per unit
- — number value.
- Units sold (optional)
- — number value.
- Fixed costs (optional)
- — number value.
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Contribution margin per unit = Price − Variable cost per unit; Contribution margin ratio = Contribution margin per unit ÷ Price; Total contribution = Contribution per unit × Units
Worked example
$50 price with $20 of variable cost
Each sale contributes $30 towards fixed costs and profit.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: OpenStax — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
The part of each sale left after the variable cost of making it.
The question it answers: How much of each sale is left to cover fixed costs and profit?
The formula
Contribution margin per unit = Price − Variable cost per unit; Contribution margin ratio = Contribution margin per unit ÷ Price; Total contribution = Contribution per unit × Units
- P — Selling price per unit
- (currency). Price charged.
- V — Variable cost per unit
- (currency). Cost that varies with each unit.
- Q — Units sold
- (count). Optional volume, to show total contribution.
- F — Fixed costs
- (currency). Optional, to show operating profit at that volume.
Units: Currency per unit; ratio as a percentage.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Direct subtraction and division of the entered price and cost.
Published alternatives
More than one published form of this calculation exists. Each one assumes something different, so the right one depends on your situation.
Contribution margin per unit (used by default)
CM = Price − Variable cost per unit
Use it when: Use for a single product.
It assumes: Variable cost per unit is constant over the range considered.
Contribution margin ratio
CM ratio = (Price − Variable cost) ÷ Price
Use it when: Use to compare products of different prices, or for a mix.
It assumes: Variable cost per unit is constant over the range considered.
Assumptions built into the result
- Business: Variable cost per unit is constant over the volume considered.
Figures this calculator will never guess for you
- No benchmark margin is offered as a target.
Limitations
- Contribution is not profit: fixed costs still have to be covered.
Source and version
- Standard or reference
- Contribution margin (OpenStax, Principles of Accounting Volume 2: Managerial Accounting, contribution margin.)
- Published source
- OpenStax — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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