Contribution Margin Calculator

Find contribution margin per unit, the contribution margin ratio and profit after fixed costs.

Price per unit	$50
Variable cost per unit	$30
Units sold	2,000
Fixed costs	$25,000

Price per unit

Variable cost per unit

Units sold

Fixed costs

Contribution margin per unit

$20.00

Ratio 40%. Total contribution $40,000 less fixed costs gives $15,000 operating profit.

CM ratio: 40%
Total contribution: $40,000

Each unit's price

Variable cost60%: $30.00
Contribution margin40%: $20.00

From sales to operating profit

Sales$100,000
Variable costs−$60,000
Fixed costs−$25,000
Operating profit$15,000

About the Contribution Margin Calculator

Enter the price and variable cost per unit, the number of units sold and your fixed costs. The calculator shows the contribution per unit, the contribution margin ratio, the total contribution and the operating profit.

Contribution margin is what each sale contributes to fixed costs and profit after variable costs. The ratio tells you how much of each extra unit of revenue becomes profit once fixed costs are covered.

The formula

CM = price − variable cost; CM ratio = CM ÷ price

Worked example

Price 50, variable cost 30, 2,000 units, fixed costs 25,000

CM per unit = 50 − 30 = 20; ratio 40%
Total contribution: 20 × 2,000 = 40,000
Operating profit: 40,000 − 25,000 = 15,000

Things to keep in mind

Assumes a constant price and variable cost per unit; discounts and volume pricing change both.

Questions people ask

How is it different from gross margin?

Gross margin subtracts cost of goods sold, which can include some fixed production costs.

What's it used for?

Pricing, product-mix and break-even decisions.

How does it give break-even?

Fixed costs ÷ CM per unit: 25,000 ÷ 20 = 1,250 units.