People type this into search every day: contribution margin calculator.
Contribution margin is what one sale leaves after variable cost. The ratio is that leftover divided by the price. The SBA’s break-even guide defines contribution margin as the gap between price and the cost to make the product, and it writes the ratio as (price − variable cost) ÷ price. The same leftover is what the guide divides into fixed costs to find the break-even unit count.
The contribution margin calculator reports the ratio, the dollars per unit, the period total, and the units that cover fixed costs:
Contribution per unit = price − variable cost
Ratio = contribution per unit ÷ price
Units to cover fixed costs = fixed costs ÷ contribution per unit
Fixed costs do not enter the ratio. They enter the leftover after you multiply by units. The break-even calculator uses that unit count as its headline. Gross margin on a whole period, after cost of goods sold, is the gross profit margin calculator. A selling price built from a target margin is the markup vs margin calculator.
This page uses one average unit. Mixed costs need a split before you type them: the part that stays if you sell nothing goes in fixed costs, and the part that shows up on each unit goes in variable cost. These are labeled examples, not a quote and not an accounting close.
Fig 1
Price down to a leftover
Variable cost comes off the price. Fixed costs come off the period.
The ratio divides the per-unit leftover by price. Fixed costs change what remains after you multiply by units sold.
Example 1. Twenty dollars on a fifty-dollar price
This is the calculator’s published example.
- Selling price: $50
- Variable cost: $30
- Units sold: 600
- Fixed costs: $10,000
Contribution per unit = 50 − 30 = $20.00.
Ratio = 20 ÷ 50 = 40%.
Total contribution = 20 × 600 = $12,000.00.
After fixed costs = 12,000 − 10,000 = $2,000.00.
Units to cover fixed costs = 10,000 ÷ 20 = 500.
Calculator result
Contribution margin
- Selling price per unit
- $50.00
- Variable cost per unit
- $30.00
- Units sold in the period
- 600 units
- Fixed costs in the period
- $10,000.00
40%
contribution-margin ratio
- Contribution per unit
- $20.00
- Total contribution
- $12,000.00
- After fixed costs
- $2,000.00
Fig 2 · 1/2
What the $50 price is
Variable cost $30. Fixed costs stay off this bar.
Variable cost
$30
Contribution
$20
Variable cost is $30, which is 60% of the price.
Contribution is $20, a 40% ratio.
You sold 600 units and needed 500 to cover the fixed costs, so the period keeps $2,000. Sell only those 500 units and the ratio is still 40%, with $0 left after fixed costs. The extra 100 units are what produce the $2,000.
Example 2. What if the price drops to $40?
Hold variable cost at $30, units at 600, and fixed costs at $10,000. Change the price to $40.
Contribution per unit = 40 − 30 = $10.00.
Ratio = 10 ÷ 40 = 25%.
Total contribution = 10 × 600 = $6,000.00.
After fixed costs = 6,000 − 10,000 = −$4,000.00.
Units to cover fixed costs = 10,000 ÷ 10 = 1,000.
Calculator result
Contribution margin
- Selling price per unit
- $40.00
25%
contribution-margin ratio
- Contribution per unit
- $10.00
- Total contribution
- $6,000.00
- After fixed costs
- -$4,000.00
The same 600 sales that left $2,000 in example 1 now lose $4,000. You would need 1,000 − 600 = 400 more units at this price to cover the fixed costs. A $10 price cut cut the per-unit leftover in half, from $20 to $10, because the variable cost stayed at $30.
A price of $45 sits between those two:
Contribution per unit = 45 − 30 = $15.00.
Ratio = 15 ÷ 45 = 33.3%.
Total contribution = 15 × 600 = $9,000.00.
After fixed costs = 9,000 − 10,000 = −$1,000.00.
Units to cover fixed costs = 10,000 ÷ 15 = 666.7.
Six hundred units are 66.7 short of 666.7, and the period is $1,000 short of covering fixed costs. One more step up, at the published $50, you are $2,000 ahead.
Fig 3 · 1/6
The ratio as the price rises
Variable cost stays at $30. Fixed costs are not in the ratio.
Contribution margin
- Ratio
| Point | Ratio |
|---|---|
| $35 | 14.3% |
| $40 | 25% |
| $45 | 33.3% |
| $50 | 40% |
| $55 | 45.5% |
| $60 | 50% |
At $35 the ratio is 14.3%. At $40 it is 25%.
At $50 it is 40%. At $60 it is 50%.
The rest of that price sweep, still at 600 units and $10,000 of fixed costs:
- Price $35: contribution $5.00, ratio 14.3%, total $3,000.00, after fixed costs −$7,000.00, units to cover 2,000.
- Price $55: contribution $25.00, ratio 45.5%, total $15,000.00, after fixed costs $5,000.00, units to cover 400.
- Price $60: contribution $30.00, ratio 50%, total $18,000.00, after fixed costs $8,000.00, units to cover 333.3.
Fig 4 · 1/2
Variable cost and contribution
Variable cost stays $30. The stack is the price.
- Variable cost
- Contribution
| Category | Variable cost | Contribution |
|---|---|---|
| $40 | $30 | $10 |
| $50 | $30 | $20 |
| $60 | $30 | $30 |
At $40, contribution is $10.
At $50 it is $20. At $60 it is $30.
Example 3. What if variable cost rises to $38?
Back to a $50 price, 600 units, and $10,000 of fixed costs. Variable cost moves from $30 to $38.
Contribution per unit = 50 − 38 = $12.00.
Ratio = 12 ÷ 50 = 24%.
Total contribution = 12 × 600 = $7,200.00.
After fixed costs = 7,200 − 10,000 = −$2,800.00.
Units to cover fixed costs = 10,000 ÷ 12 = 833.3.
An $8 increase in variable cost removed $8 from each unit’s leftover. Across 600 units that is 8 × 600 = $4,800 less contribution than example 1’s $12,000, and 12,000 − 7,200 = $4,800 confirms it. The period swings from $2,000 ahead of fixed costs to $2,800 behind.
Example 4. What if fixed costs double?
Same $50 price, $30 variable cost, and 600 units. Fixed costs move from $10,000 to $20,000.
Contribution per unit is still $20.00. The ratio is still 40%. Total contribution is still $12,000.00.
After fixed costs = 12,000 − 20,000 = −$8,000.00.
Units to cover fixed costs = 20,000 ÷ 20 = 1,000.
The ratio ignored the extra $10,000. The period did not. You now need 1,000 units, which is 400 more than you sold, and the month is $8,000 short.
Fig 5 · 1/4
Units that cover fixed costs
The $50 product, except the $40 price row
Units
- Units to cover
| Category | Units to cover |
|---|---|
| Published | 500 |
| $40 price | 1000 |
| $38 cost | 833.3 |
| $20k fixed | 1000 |
At the published inputs, 500 units cover $10,000 of fixed costs.
A $40 price needs 1,000. Variable cost of $38 needs 833.3. Fixed costs of $20,000 need 1,000.
Example 5. A $4.50 cup
- Selling price: $4.50
- Variable cost: $1.15
- Units sold: 2,400
- Fixed costs: $6,000
Contribution per unit = 4.50 − 1.15 = $3.35.
Ratio = 3.35 ÷ 4.50 = 74.4%.
Total contribution = 3.35 × 2,400 = $8,040.00.
After fixed costs = 8,040 − 6,000 = $2,040.00.
Units to cover fixed costs = 6,000 ÷ 3.35 = 1,791.
Calculator result
Contribution margin
- Selling price per unit
- $4.50
- Variable cost per unit
- $1.15
- Units sold in the period
- 2400 units
- Fixed costs in the period
- $6,000.00
74.4%
contribution-margin ratio
- Contribution per unit
- $3.35
- Total contribution
- $8,040.00
- After fixed costs
- $2,040.00
The ratio is 74.4%, much higher than the 40% on the $50 product. The dollars per unit are $3.35, much smaller than $20. After fixed costs the cup period keeps $2,040 and the $50 product keeps $2,000. Close leftovers, different shapes. A high ratio on a small price is a thin dollar cushion on each sale, and it takes 1,791 sales to cover $6,000.
Example 6. A $200 product, fewer sales
- Selling price: $200
- Variable cost: $80
- Units sold: 80
- Fixed costs: $8,000
Contribution per unit = 200 − 80 = $120.00.
Ratio = 120 ÷ 200 = 60%.
Total contribution = 120 × 80 = $9,600.00.
After fixed costs = 9,600 − 8,000 = $1,600.00.
Units to cover fixed costs = 8,000 ÷ 120 = 66.7.
Eighty sales clear the 66.7 unit mark, and $1,600 remains. The ratio is 60%, between the cup and the $50 product. The per-unit leftover is $120, so each lost sale costs more contribution than a lost $50 sale. The ratio will not tell you that. The $120 will.
Example 7. Price below variable cost
- Selling price: $25
- Variable cost: $32
- Units sold: 400
- Fixed costs: $3,000
Contribution per unit = 25 − 32 = −$7.00.
Ratio = −7 ÷ 25 = −28%.
Total contribution = −7 × 400 = −$2,800.00.
After fixed costs = −2,800 − 3,000 = −$5,800.00.
Units to cover fixed costs: none. A negative leftover never covers a positive fixed cost, no matter how many units you sell. Another unit makes the hole $7 deeper.
The calculator labels the ratio a negative contribution-margin ratio. Selling more is the wrong direction until the price or the variable cost changes.
Example 8. Fixed costs hidden inside the variable cost
Example 1 has $30 of variable cost and $10,000 of fixed costs. Suppose the $10,000 is spread across the 600 units and typed into the variable box instead.
10,000 ÷ 600 = $16.666…, which rounds to $16.67 per unit if you type cents.
Variable cost becomes 30.00 + 16.67 = $46.67. Fixed costs get typed as $0.
- Price: $50
- Variable cost: $46.67
- Units: 600
- Fixed costs: $0
Contribution per unit = 50 − 46.67 = $3.33.
Ratio = 3.33 ÷ 50 = 6.7%.
Total contribution = 3.33 × 600 = $1,998.00.
After fixed costs = $1,998.00, because fixed costs were typed as zero.
Units to cover fixed costs = 0.
The honest split, from example 1, is a 40% ratio, $20.00 per unit, $12,000.00 of contribution, $2,000.00 after fixed costs, and 500 units to cover those costs.
The period leftover is about $2,000 either way. The penny rounding makes it $1,998. The ratio is the part that broke: 6.7% instead of 40%. The break-even count broke with it, printing 0 units because the fixed box is empty. SBA’s guide treats a cost with a fixed piece and a variable piece as something you split before the formula. Stuffing the rent into the per-unit box hides the leftover on each sale.
Example 9. Fewer units, same ratio
Same $50 price, $30 variable cost, and $10,000 of fixed costs. Units sold fall from 600 to 400.
The ratio is still 40%. Contribution per unit is still $20.00.
Total contribution = 20 × 400 = $8,000.00.
After fixed costs = 8,000 − 10,000 = −$2,000.00.
Units to cover fixed costs stay 500. You sold 100 fewer than that, and 100 × 20 = $2,000, which is the shortfall.
At zero units the ratio is still 40% and the per-unit leftover is still $20. Total contribution is $0.00. After fixed costs you are −$10,000.00, the fixed costs with nothing in front of them. The unit count that would cover them is still 500. Volume changes the period. It does not change the ratio.
Nine contribution cases side by side
| Example | Price | Variable | Units | Fixed | Ratio | Per unit | After fixed | Units to cover |
|---|---|---|---|---|---|---|---|---|
| 1. Published | $50 | $30 | 600 | $10,000 | 40% | $20.00 | $2,000 | 500 |
| 2. Price $40 | $40 | $30 | 600 | $10,000 | 25% | $10.00 | −$4,000 | 1,000 |
| 2. Price $45 | $45 | $30 | 600 | $10,000 | 33.3% | $15.00 | −$1,000 | 666.7 |
| 2. Price $60 | $60 | $30 | 600 | $10,000 | 50% | $30.00 | $8,000 | 333.3 |
| 3. Cost $38 | $50 | $38 | 600 | $10,000 | 24% | $12.00 | −$2,800 | 833.3 |
| 4. Fixed $20,000 | $50 | $30 | 600 | $20,000 | 40% | $20.00 | −$8,000 | 1,000 |
| 5. Cup | $4.50 | $1.15 | 2,400 | $6,000 | 74.4% | $3.35 | $2,040 | 1,791 |
| 6. Fewer, larger | $200 | $80 | 80 | $8,000 | 60% | $120.00 | $1,600 | 66.7 |
| 7. Below cost | $25 | $32 | 400 | $3,000 | −28% | −$7.00 | −$5,800 | None |
| 8. Fixed stuffed in | $50 | $46.67 | 600 | $0 | 6.7% | $3.33 | $1,998 | 0 |
| 9. 400 units | $50 | $30 | 400 | $10,000 | 40% | $20.00 | −$2,000 | 500 |
Example 8 is the published case with the $10,000 of fixed costs typed as $16.67 extra variable cost. Example 7 has no break-even unit count, because each sale loses $7 before fixed costs.
Open the contribution margin calculator with one average price, the variable cost on that unit, the units you sold, and the fixed costs for the period. When you want the break-even count as the headline, open the break-even calculator. A period margin after cost of goods sold, rather than after variable cost, is the gross profit margin calculator.