Contribution Margin Calculator

See how much each sale contributes to fixed costs and profit, and how many units you need to break even.

Selling price per unit

Variable cost per unit

Fixed costs (per month)

Units sold (per month)

Currency

Contribution margin per unit

$25.00

Contribution margin ratio: 41.67%
Total contribution: $20,000.00
Break-even units: 480

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How to use the contribution margin calculator

Enter your selling price per unit.
Enter all variable costs per unit: product, packaging, shipping, payment and marketplace fees.
Add monthly fixed costs and units sold to see total contribution and your break-even point.

Contribution margin formulas

Contribution margin per unit = Price − Variable cost

CM ratio % = CM per unit ÷ Price × 100

Total contribution = CM per unit × Units sold

Break-even units = Fixed costs ÷ CM per unit

Variable costs change with every unit sold; fixed costs stay the same whatever you sell, like rent, software and salaries.

Example

A product sells for 60 with 35 in variable costs, so each unit contributes 25 (a 41.67% CM ratio). Selling 800 units a month gives 20,000 in total contribution. With 12,000 in fixed costs, you break even after 480 units.

Contribution margin vs gross margin

Gross margin only removes the cost of goods. Contribution margin also removes other variable costs like shipping, fees and packaging, so it shows the real cash each order brings in. For ecommerce, it is often the more useful number.

How to use contribution margin

Use it to decide which products to push, whether a discount still pays, and how much you can spend on ads per order. Products with a low contribution margin need high volume to be worth selling.