Contribution Margin Calculator
Contribution Margin Calculator helps businesses determine profitability of individual products. It shows how much revenue remains after variable costs to cover fixed costs and generate profit. Essential for pricing decisions, cost control, and understanding break-even points.
Calculator
Calculation Process
Formula: Contribution Margin = Total Revenue - Variable Costs
Steps:
- Identify total revenue from product/service sales
- Sum all variable costs (materials, labor, commissions)
- Subtract variable costs from total revenue
- Calculate CM ratio: (Contribution Margin/Revenue) × 100
- Analyze results to make business decisions
How to Use
Enter total revenue and variable costs in dollars. Click calculate to get contribution margin and ratio. Use clear to reset. Results show available funds for fixed costs and profit. Regular use helps monitor product profitability, optimize pricing, and control costs. Compare across products/services to allocate resources effectively. Essential for break-even analysis and financial planning.