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Twenty dollars on each unit
Sell a product at 50. Variable cost is 30. You move 600 units in the month. Fixed costs are 10,000. Each unit leaves 20. The ratio is 40 percent.
Selling price per unit: 25% lower
Change selling price per unit to 38 while keeping the other example values the same.
Selling price per unit: 25% higher
Change selling price per unit to 63 while keeping the other example values the same.
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Quick answer
What does the Contribution margin calculate?
How much of each sale is left after variable cost, and what share of the price is that? This calculator uses selling price per unit, variable cost per unit, units sold in the period, and fixed costs in the period to estimate leftover after variable cost immediately in your browser.
With the values currently entered, the result is 40% — contribution-margin ratio. It also shows contribution per unit, total contribution, after fixed costs, and units to cover fixed costs.
How to use the Contribution margin
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Selling price per unit
- Variable cost per unit
- Units sold in the period — entered in units
- Fixed costs in the period
Contribution margin formula
Contribution per unit = price − variable cost. Ratio = contribution per unit ÷ price.
Assumptions
- SBA break-even guidance defines contribution margin as the gap between price and variable cost, then writes the ratio as that gap divided by price.
- One average product. Split mixed costs into a fixed part and a variable part before you type them.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Contribution margin example and edge cases
Contribution margin is the leftover on one sale after variable cost. SBA writes the ratio as (price − variable cost) ÷ price, then uses that leftover to find the break-even unit count.
Example: Twenty dollars on each unit
Sell a product at 50. Variable cost is 30. You move 600 units in the month. Fixed costs are 10,000. Each unit leaves 20. The ratio is 40 percent.
- Selling price per unit
- 50
- Variable cost per unit
- 30
- Units sold in the period
- 600 units
- Fixed costs in the period
- 10,000
Calculated result40%contribution-margin ratio
600 units leave 12,000 of contribution. After 10,000 of fixed costs you have 2,000. The same leftover says 500 units cover the fixed costs. That unit count is the break-even calculator’s headline.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the percent, then the money per unit. A 40 percent ratio on a 10 item is a thinner cushion than 40 percent on a 200 item.
- Fixed costs do not change the ratio. They change what remains after you add up the period.
Edge cases worth checking
The cost has a fixed piece and a variable piece
SBA calls those semi-variable. Split the monthly minimum into fixed costs and the per-unit extra into variable cost. Mixing them in one box hides the leftover on each sale.
You sell three products with different leftovers
This page uses one average unit. Run each product on its own, or weight the price and variable cost by the mix you actually sell.
What changes the result most
Selling price per unit
Use a current amount for selling price per unit. Include fees or recurring costs that belong in the same figure.
Variable cost per unit
Use a current amount for variable cost per unit. Include fees or recurring costs that belong in the same figure.
Units sold in the period
Keep units sold in the period on the same time basis as the other inputs. Monthly and annual values are easy to mix up.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Selling price per unit: 25% lower
3821.1%contribution-margin ratio
Selling price per unit: 25% higher
6352.4%contribution-margin ratio
Variable cost per unit: 25% higher
3824%contribution-margin ratio
Common mistakes
Check selling price per unit
SBA break-even guidance defines contribution margin as the gap between price and variable cost, then writes the ratio as that gap divided by price. Make sure this matches the number you enter.
Keep fixed costs in the period consistent
One average product. Split mixed costs into a fixed part and a variable part before you type them. Use the same units and time period throughout the calculation.
Do not rely on one contribution margin scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
How much of each sale is left after variable cost, and what share of the price is that?
It does not replace a quote, contract, accountant, or local employment guidance.