Contribution Margin Calculator

LAST UPDATE: September 24th, 2020


Definition – What is a Contribution Margin?

Contribution margin is the value of profit that each unit sold contributes.

It is used to help understand the additional benefit of selling one more unit for the firm.

Formula – How to calculate contribution margin

Contribution Margin = Price per Unit – Variable Cost per Unit


The latest unit sold will sell for $20 and has a variable cost of $10.

Contribution Margin = $20 – $10 = $10

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