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Contribution margin calculator formula
Subtract total variable costs from revenue. Divide contribution margin by revenue for the ratio, and by units sold for the per-unit view.
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Contribution Margin Calculator
Calculate contribution margin, contribution margin ratio, and per-unit contribution from revenue and a transparent variable-cost ledger.
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01 USE IT NOW02 NO ACCOUNT03 FIELD NOTES BELOW
WORKING INPUTS
Separate variable cost from revenue.
LIVE RESULT
Contribution margin
$4,000.00Contribution remains to cover fixed costs and profit.TOTAL VARIABLE COSTS$6,000.00
CONTRIBUTION MARGIN RATIO40.00%
CONTRIBUTION PER UNIT$40.00
UNITS SOLD100
38
THE DOLLARS LEFT TO COVER THE BUSINESS
See what remains after variable costs move with sales.
Contribution margin isolates the amount available to cover fixed costs and profit without pretending that every expense belongs in the variable-cost ledger.
WORKING VIEW
$4,000 CONTRIBUTIONMATCHED PERIOD
METHODrevenue − total variable costs
WORKING NOTE40% ratio · $40 per unit across 100 units
INPUTS → CLEAR OUTPUT
THE FIELD NOTES
Quick answer above. Better decisions below.
Use the result now, then read the practical notes for assumptions, examples, limitations, and the choices behind it.
MATCHED PERIOD$4,000 CONTRIBUTION
40% ratio · $40 per unit across 100 units
02
Build a consistent variable-cost ledger
Include costs that change with the modeled sales volume, such as product cost, fulfillment, transaction fees, and variable commissions.
03
Read dollars, ratio, and per-unit contribution
Contribution dollars show what is available to cover fixed costs and profit. The ratio expresses that amount as a share of revenue.
04
What contribution margin leaves out
A positive contribution margin does not prove that the business is profitable after fixed costs, taxes, financing, and owner compensation.
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Contribution margin calculator formula
Subtract total variable costs from revenue. Divide contribution margin by revenue for the ratio, and by units sold for the per-unit view.
Currency and percentages are rounded only for display after full-precision calculation.
Build a consistent variable-cost ledger
Include costs that change with the modeled sales volume, such as product cost, fulfillment, transaction fees, and variable commissions.
Keep fixed rent, salaried overhead, and other period costs outside this ledger unless they truly vary with the chosen volume.
Read dollars, ratio, and per-unit contribution
Contribution dollars show what is available to cover fixed costs and profit. The ratio expresses that amount as a share of revenue.
The per-unit view is available when a positive units-sold count is provided.
What contribution margin leaves out
A positive contribution margin does not prove that the business is profitable after fixed costs, taxes, financing, and owner compensation.
Classification choices matter, so compare periods only when the cost policy and revenue scope remain consistent.
Questions, answered.
How do you calculate contribution margin?
Subtract total variable costs from revenue. The result is the amount available to cover fixed costs and profit.
How do you calculate contribution margin ratio?
Divide contribution margin by revenue and multiply by 100. Revenue must be greater than zero for a finite ratio.
Is contribution margin the same as profit?
No. Contribution margin is before fixed costs and other non-variable expenses, so it is not net profit.
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