Contribution margin, margin ratio and break-even volume for a product or service.
contribution margin per unit
How to use this tool
Type what one unit sells for and what it costs to make or deliver.
Type rent, salaries and other costs that do not change with volume.
Fixed costs divided by margin per unit is the volume you must sell.
In Advanced options, type units sold to see profit or loss.
Formula & worked example
Worked example: price $50 – variable cost $30 = $20 contribution margin per unit (40% ratio). Fixed costs $100,000 / $20 = 5,000 break-even units. Selling 10,000 units gives $200,000 contribution – $100,000 fixed = $100,000 profit.
Limitations — read this before you rely on it
This is a single-product, linear model: it assumes constant price and variable cost per unit and fixed costs that do not step up with volume. Real businesses have mixed products, discounts and capacity limits.
Frequently asked questions
The money left from each sale after variable costs, available to cover fixed costs and then profit. It is not the same as gross margin if some fixed production costs sit in COGS.
The sales volume where total contribution exactly covers fixed costs: profit zero. Below it you lose money; above it each extra unit adds its contribution margin to profit.
No. This is a calculator from the numbers you enter. Tax, legal and investment decisions depend on your full circumstances, so check with a qualified professional for real decisions.
As accurate as the inputs and the stated formula. It is a model with simplifications listed in the limitations; try a range of inputs rather than trusting one figure.
Yes for the maths, which is currency-neutral unless a jurisdiction is stated. Tax rules, thresholds and market conventions differ by country, so check local rules where they matter.