Canonical formula calculator
CONTRIBUTION MARGIN
What each sale contributes to fixed costs and profit, in percent and dollars — the per-unit version of gross margin.
Worked example
How the number is worked out
A food truck deciding what one taco actually leaves behind.
Starting from
Working
Sixty-four cents in the dollar is left to cover the truck, the pitch fee and the owner. It is not profit — it is what every sale contributes toward the costs that arrive whether or not anyone turns up.
What this tells you
Contribution margin tells you what each individual sale contributes after variable costs — both as a percent of price and as dollars per unit. Above 50% is healthy for most products. The percent matters for comparison across products and price points; the per-unit dollar matters for thinking about volume and break-even. This calculator shows both.
When to use it
Calculate contribution margin per product when setting prices, evaluating discounts, or deciding which products to push. A low-percent product can still be your best seller if volume is high and the per-unit dollar is meaningful. A high-percent product can still be a bad bet if no one buys it. Both numbers are required for real pricing decisions.
What it doesn’t tell you
Contribution margin treats variable cost as a single number. In reality, variable costs scale differently — some are perfectly linear with units sold, some have step functions (a new warehouse at 10K units, a new server at 100K users). Use contribution margin for marginal decisions; use full cost analysis for structural ones.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.