Contribution Margin Calculator
Contribution margin is what each sale leaves after its own variable costs, and it is the number that decides how many sales you need to break even.
Contribution margin
40.00%
- Contribution per unit
- $18.00
- Break even units
- 7,000
- Break even revenue
- $315,000.00
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
contribution margin = (price - variable cost per unit) / price
- CM
- Contribution margin, as a percentage of price
- C
- Contribution per unit, in currency
- P
- Selling price per unit
- V
- Variable cost per unit
How to check the result by hand
- 1
Identify the variable costs of one unit
Materials, direct labour, packaging, per-order payment fees and shipping. If producing one more unit would incur it, it is variable.
- 2
Subtract them from the price
Forty five minus twenty seven leaves eighteen of contribution per unit. This is what each sale adds towards fixed costs.
- 3
Divide by the price for the margin percentage
Eighteen over forty five is zero point four, or forty percent. This is the figure to compare across products.
- 4
Divide fixed costs by contribution per unit
One hundred and twenty six thousand over eighteen is seven thousand units, which is the break-even volume.
- 5
Multiply by price for break-even revenue
Seven thousand units at forty five is three hundred and fifteen thousand of revenue, which is the more useful figure for a sales target.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Contribution Margin page.