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Business & Accounting

Contribution Margin Calculator

Calculate contribution margin per unit, the contribution margin ratio, total contribution and operating income.

Your inputs

Results

Contribution margin per unit

$20.00

Contribution margin ratio
40%
Total contribution
$20,000.00
Operating income (after fixed costs)
$5,000.00

✓Exact calculation — rounded only for display

What this calculator does

Contribution margin is what each sale contributes toward fixed costs and profit after paying its variable costs. It is central to cost-volume-profit analysis.

Formula and method

CM per unit = price − variable cost; CM ratio = CM ÷ price; Operating income = CM × units − fixed costs

Worked example

Calculated by this tool with its default inputs:

Inputs

  • Price per unit: 50 (any currency)
  • Variable cost per unit: 30 (any currency)
  • Units sold: 1000
  • Fixed costs (optional): 15000 (any currency)

Results

  • Contribution margin per unit: 20
  • Contribution margin ratio: 40%
  • Total contribution: 20,000
  • Operating income (after fixed costs): 5,000

How to read the results

The CM ratio tells you how much of each extra unit of revenue becomes profit once fixed costs are covered.

Assumptions and limitations

  • Useful for product-mix and pricing decisions.

Financial results are estimates based on the inputs and assumptions shown. They are not financial advice; confirm figures with your lender, provider or a qualified adviser before making decisions.

Questions

Is contribution margin the same as gross margin?

No. Gross margin subtracts COGS, which may include some fixed production costs; contribution margin subtracts only variable costs.

Methodology and verification

Result type
Exact mathematical calculation (rounded only for display)
Formula version
1.0
Automated verification
2 reference and validation test cases, checked against independently computed values. The site cannot be built if any of them fail.
Editorial review
Awaiting human editorial review. The explanation was drafted with AI assistance; the formula and examples are verified by the automated tests above.

Privacy

Everything you enter is calculated in this browser and is not sent to Numerith or anyone else. Inputs are added to a share link only if you choose to include them. Privacy policy