Business Finance Calculators
Contribution Margin Calculator
Calculate total and per-unit contribution margin, the contribution margin ratio, operating income and break-even revenue.
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The tool
Enter your numbers below. Results update as you type, and nothing leaves your browser.
Everything you enter stays on your own machine. Nothing is sent to us or to anyone else, which you can confirm in your browser network tab.
What people use it for
- Deciding which products to push
- Evaluating a special-price order
- Break-even analysis
- Management accounts
About this tool
What the Contribution Margin Calculator does
Contribution margin is revenue minus variable costs: the money left to pay fixed costs and produce profit. The contribution margin ratio shows how much of each sale contributes, which makes it the key number for pricing, product mix and break-even decisions.
Formula
- Contribution margin = revenue − variable costs
- Contribution margin ratio = contribution margin ÷ revenue
- Operating income = contribution margin − fixed costs
- Break-even revenue = fixed costs ÷ contribution margin ratio
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Revenue | $250,000 |
| Variable costs | $150,000 |
| Fixed costs | $60,000 |
| Units sold (optional) | 5,000 |
| Result | Value |
|---|---|
| Contribution margin | $100,000 |
| Contribution margin ratio | 40.0% |
| Operating income | $40,000 |
| Contribution per unit | $20.00 |
| Break-even revenue | $150,000 |
How to read the result
Contribution margin is different from gross margin: gross margin subtracts cost of goods sold, which can include fixed production costs, while contribution margin subtracts only costs that vary with volume.
When choosing which products to promote, rank them by contribution per unit of your scarcest resource, such as machine hours or shelf space.
Related calculators
- Markup vs Margin Calculator: Calculate markup and margin from cost and price, and find the price needed for a target margin.
- Operating Leverage Calculator: Calculate the degree of operating leverage and how much operating profit changes for a given change in sales.
- Pricing Strategy Calculator: Compare cost-plus, competitor-based and value-based prices for a product, with the margin each would earn.
- Price Elasticity of Demand Calculator: Calculate price elasticity of demand with the midpoint method and see how a price change affects revenue and profit.
Browse every calculator in Business Finance Calculators, or talk to us about growth marketing for your business.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
Revenue minus variable costs. It contributes towards fixed costs first and then to profit.
It depends on the business. Software often exceeds 70%, while retail and manufacturing are usually much lower.
Gross margin deducts cost of goods sold, which may include fixed costs. Contribution margin deducts only variable costs.
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