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About this tool
Contribution margin per unit, ratio and total.
Contribution Margin Calculator works out how much of each sale is left to cover fixed costs and profit, using contribution margin per unit = price per unit minus variable cost per unit, the contribution margin ratio as that figure divided by price, and total contribution as margin per unit times units sold. Enter three numbers — price, variable cost and units — and you get all three outputs at once. It is aimed at small business owners, freelancers and finance students pricing a product or checking whether a line is worth keeping.
Open Contribution Margin Calculator on AltFTool — it loads instantly in your browser.
Enter the price per unit of your product to establish the revenue generated by each sale
Input the variable cost per unit to account for the direct expenses associated with producing each unit
Specify the number of units sold to calculate the total contribution margin and understand the overall profitability of your product
You see the absolute margin, the percentage of price it represents and the total across your volume without running three separate sums.
The calculation deliberately excludes rent, salaries and other fixed costs, which is what makes the result usable for pricing and break-even work.
If price per unit is zero the ratio is shown as a dash rather than a misleading number, so a blank field cannot masquerade as a result.
Subtract variable cost per unit from price per unit. At a price of 50 and variable cost of 30, contribution margin is 20 per unit — the amount each sale contributes to fixed costs and then to profit.
Contribution margin divided by price, expressed as a percentage. A 20 margin on a 50 price is a 40 percent ratio, meaning 40 cents of every sales dollar is available for fixed costs and profit.
Costs that move with each additional unit — raw materials, direct labour paid per unit, packaging, shipping, sales commission and payment processing fees. Rent, insurance, salaried staff and software subscriptions are fixed and stay out of this calculation.
Divide total fixed costs by contribution margin per unit. With 20 of margin per unit and 40,000 of fixed costs a year, break-even is 2,000 units; anything above that contributes to profit. This is a planning estimate, so confirm your cost classification with an accountant before basing decisions on it.
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