Contribution Margin Calculator
Analyze product profitability and optimize your pricing strategy
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How do I calculate my contribution margin?
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What is a 30% margin on $100?
A 30% margin on $100 means the contribution margin is $30. This indicates that after covering variable costs of $70, you have $30 remaining to cover fixed costs and generate profit. The contribution margin ratio of 30% means that for every dollar of sales, 30 cents contributes to covering fixed expenses and profit generation.
What is the difference between CM and GM?
CM (Contribution Margin) only deducts variable costs from revenue, while GM (Gross Margin) deducts all cost of goods sold including some fixed manufacturing costs. CM focuses on variable costs that change with production volume, making it useful for decision-making about pricing, product mix, and break-even analysis. GM provides a broader view of product profitability.
Why is contribution margin important for business decisions?
Contribution margin helps determine which products or services generate the most profit per unit, guides pricing decisions, calculates break-even points, and evaluates the impact of volume changes on profitability. It's essential for product mix optimization, cost control strategies, and understanding how sales changes affect overall business performance and cash flow.
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Calculate contribution margins and boost revenue with high-margin cold email campaignsÂ
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