Contribution margin calculator with workings
Enter price, variable cost and quantity, optionally the fixed costs. You get unit contribution, total contribution, the contribution margin ratio and the operating result, each with the workings.
Result
- Unit contribution
- £20.00
- Total contribution
- £20,000.00
- Revenue
- £50,000.00
- Total variable costs
- £30,000.00
- Contribution margin ratio
- 40%
- Operating result (contribution − fixed costs)
- £5,000.00
The contribution covers the fixed costs and leaves a profit.
Workings
- 1Unit contribution = price − variable cost = £50.00 − £30.00 = £20.00
- 2Total contribution = £20.00 × 1,000 = £20,000.00
- 3Contribution margin ratio = £20.00 / £50.00 × 100 = 40%
- 4Operating result = £20,000.00 − £15,000.00 = £5,000.00
The formulas
Unit contribution = price − variable cost Total = unit contribution × quantity
- The unit contribution is what each unit sold adds towards fixed costs and profit.
- The contribution margin ratio (unit contribution ÷ price) is the share of revenue left after variable costs.
- Operating result = total contribution − fixed costs.
Frequently asked questions
What is a good contribution margin?+
It depends on the fixed costs. The unit contribution should always be positive; whether it is enough shows when you compare the total contribution with fixed costs.