📈 Contribution Margin Calculator

Contribution margin is sale price minus variable cost — a standard managerial-accounting metric representing how much each sale contributes toward covering fixed costs and generating profit. CM per unit = Sale Price − Variable Cost; CM ratio = CM per unit ÷ Sale Price. For example, with a sale price of $50 and variable cost of $30, CM per unit is 50 − 30 = $20, and CM ratio is 20 ÷ 50 = 40%. Multiplying by 1,000 units sold gives a total contribution margin of 20 × 1,000 = $20,000, the amount available before fixed costs are covered.

When you enter fixed costs, Break-Even Units = Fixed Costs ÷ CM per unit gives the minimum sales volume needed to reach profitability. For example, with fixed costs of $10,000 and a CM per unit of $20, break-even volume is 10,000 ÷ 20 = 500 units — selling beyond that generates net profit above fixed costs. A higher CM ratio lowers the volume needed to break even, making this a key metric for pricing decisions and variable-cost-reduction strategy.