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Contribution margin — selling price minus variable cost, per unit — is distinct from overall profit margin because it only subtracts variable costs, not fixed overhead. That makes it the right figure for break-even analysis and understanding unit economics.
This calculator finds your contribution margin per unit, its ratio, and (if you provide units sold) your total contribution margin.
How it works
Enter your selling price per unit and variable cost per unit. The tool subtracts the two to find contribution margin per unit, divides by price for the ratio, and multiplies by units sold (if provided) for the total.
- Enter selling price per unit ($).
- Enter variable cost per unit ($).
- Enter units sold (optional).
- Click Calculate to see your results.
Examples
A $50 product with $30 variable cost
A $50 selling price with a $30 variable cost per unit gives a $20 contribution margin (40% ratio) — across 1,000 units sold, that's $20,000 total.
Who should use it
- Finding the input needed for a break-even analysis.
- Comparing unit economics across different products or pricing scenarios.
Industry applications
- Manufacturing and product businesses
- Financial planning and analysis (FP&A)
Advantages
- Shows contribution margin per unit, ratio, and total in one calculation.
- A key input for break-even and unit-economics analysis.
Limitations
- Doesn't account for fixed costs — pair with a profit margin or break-even calculation for the full picture.
Common mistakes to avoid
- Including fixed costs (like rent or salaries) in the variable cost figure, which understates the true contribution margin.
- Confusing contribution margin with profit margin, which are related but answer different questions.
Best practices
- Use contribution margin alongside the Break-Even Calculator, since contribution margin per unit is exactly the figure needed to find a break-even point in units.
Tips
- Once you have your contribution margin per unit, divide your total fixed costs by it to find your break-even point in units — or use the Break-Even Calculator directly.