A clear result in a few inputs.
- Enter the requested values.Use consistent units and the real values for your scenario.
- Read the main result and breakdown.NumLuma recalculates immediately when an input changes.
- Check the formula and assumptions.Use the supporting context before making a real-world decision.
What this calculator does
Contribution margin measures how much of each sale remains after variable costs to contribute toward fixed costs and profit. It is different from gross margin because the classification of variable costs and COGS is not always identical.
What to know before you use the result
- Use variable costs that change with the unit or sale being modeled.
- Contribution per unit is a dollar amount; contribution margin ratio is a percentage of selling price.
- The metric feeds directly into unit break-even calculations when fixed costs are known.
Common mistakes to avoid
- Including fixed costs in the variable cost per unit.
- Confusing contribution margin with gross margin.
- Using an average selling price that does not match the variable cost mix.
Where this calculation is useful
Break-even planningPricingProduct mixUnit economics
Related concepts
contribution marginvariable costcontribution ratiobreak-even