Contribution Margin Calculator

Calculate contribution margin per unit, contribution margin ratio and total contribution margin from price, variable cost and units.

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Costs that rise with each unit: materials, direct labor, sales commission, shipping.
Your rate is remembered on this device.
Total contribution margin
$40,000.00
Contribution margin per unit
$80.00
Contribution margin ratio
80.00 %
Total sales
$50,000.00
Total variable costs
$10,000.00

Estimate generated with SortedSums: https://sortedsums.com/contribution-margin-calculator/. For informational purposes only; verify before relying on it.

Estimate only. This tool is for informational and educational purposes. Results depend on your inputs and simplifying assumptions, and are not a substitute for professional engineering, design or financial advice. Always verify with a qualified professional and applicable codes before purchasing, building or making decisions.

How it’s calculated

Contribution margin is what each sale leaves over, after its variable costs, to cover fixed costs and then profit.

CM per unit = Price − Variable cost per unit CM ratio = CM per unit ÷ Price Total CM = CM per unit × Units sold

Example (OpenStax Principles of Managerial Accounting): a product sells for $100 with $20 variable cost. CM per unit = $80, CM ratio = 80 ÷ 100 = 80%, and on 500 units total CM = 500 × 80 = $40,000.

Total CM minus fixed costs is operating profit. Fixed costs ÷ CM per unit is the break-even point in units.

Frequently asked questions

How is contribution margin different from gross margin?

Gross margin subtracts cost of goods sold, which can include fixed production overhead. Contribution margin subtracts only variable costs (including variable selling costs), which makes it the right tool for break-even and volume decisions.

What does the CM ratio tell me?

The share of each sales dollar available for fixed costs and profit. At 80%, every extra $1 of sales adds $0.80 to profit once fixed costs are covered.

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Sources

Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.

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