Free online calculator
Contribution Margin Calculator
Find the amount each unit contributes toward fixed costs and profit. Includes a worked example, formula and practical FAQs.
Formula: Contribution margin = selling price − variable cost
How to use the Contribution Margin Calculator
Find the amount each unit contributes toward fixed costs and profit. Enter the unit selling price and variable cost per unit.
Formula
Contribution = price − variable cost; contribution ratio (%) = contribution ÷ price × 100.
Worked example
A $50 sale with $30 variable cost leaves $20 contribution and a 40% contribution ratio.
Interpretation and limitations
Use variable costs such as product cost, per-order fulfillment and transaction costs. Do not allocate fixed monthly overhead into variable cost if you will also use it in a break-even model.
Contribution Margin questions
Is contribution the same as profit?
Not necessarily. Fixed costs still need to be covered before the contribution becomes operating profit.
What does negative contribution mean?
The variable cost exceeds price, so each additional unit sold increases the loss under these assumptions.
Continue your calculation
For the next step, use the Break-Even Units Calculator or the Break-Even Revenue Calculator. Review each tool’s input definitions before carrying a result into another calculation.
Frequently asked questions
Is this calculator free?
Yes. It runs in your browser and does not require an account.
How should I use the result?
Use the result as a planning estimate and verify business-critical decisions against your source records.