Contribution Margin Calculator
Find contribution margin and ratio from selling price and variable cost, per unit or for total revenue and costs.
How to Use
- Choose per-unit or total figures from the options above the form, depending on which numbers you have on hand.
- For per unit, enter the selling price and variable cost of one unit; for total, enter total revenue and total variable costs for the period.
- The result shows the contribution margin (in dollars) and the contribution margin ratio (as a percentage of revenue).
Formula
- Per unit
- margin = selling_price − variable_cost, ratio = margin ÷ selling_price × 100
- Total
- margin = total_revenue − total_variable_costs, ratio = margin ÷ total_revenue × 100
Worked Example
A $50 selling price with a $30 variable cost per unit.
- Contribution margin: $50 − $30 = $20.00 per unit
- Contribution margin ratio: $20 ÷ $50 × 100 = 40%
Result: Contribution margin per unit: $20.00 (40%)
About This Tool
What this tool does
This calculator finds contribution margin — revenue minus variable costs only, not all costs — either per unit or across total revenue and costs, along with the contribution margin ratio.
When to use it
Use it to see how much each sale (or your total sales) contributes toward covering fixed costs and profit, or to feed the contribution-margin-per-unit figure into a break-even analysis.
What the result means
Contribution margin is deliberately different from profit margin: it only subtracts *variable* costs (materials, per-unit labor, transaction fees — costs that scale with volume), not fixed overhead like rent or salaries. A positive contribution margin can still coexist with an overall loss if fixed costs are high — see the Break-Even Calculator to find the sales volume where that stops being true, and the Profit Margin Calculator for a margin based on all costs together.
Assumptions & limitations
This tool takes your variable cost figure as given — it does not classify which of your costs are "variable" versus "fixed" for you, since that split depends on your specific business and accounting method. A negative contribution margin (variable cost exceeding selling price or revenue) is calculated and shown as-is, since knowing that a product loses money on every unit sold — before fixed costs are even considered — is meaningful information.