Revenue minus variable costs — the amount each unit sold "contributes" toward covering fixed costs and generating profit.
Contribution margin tells you: after the direct variable costs of making or buying a product, how much does each sale contribute toward paying your fixed bills? If a product sells for £20 and the variable costs are £8, the contribution margin is £12. Your fixed costs (rent, salaries) need to be covered by the sum of all these contributions.
Contribution Margin = Revenue − Variable CostsContribution margin is more useful than gross margin for pricing decisions. It shows you the minimum price you can charge before a product starts costing you money. It also reveals which products are most efficient at covering fixed costs — which isn't always the highest-volume ones.
Upload your cost and sales data. Ask "What is the contribution margin for each product?" AskBiz separates your variable and fixed costs, calculates contribution margin per unit and as a percentage, and ranks products by their total contribution to covering fixed overhead.
Export a CSV or Excel file from your POS, accounting software, or spreadsheet and upload it to AskBiz.
Type your question in plain English. Try: "What is my contribution margin?" or "What is Contribution Margin? Plain English Explanation"
AskBiz returns the calculation with a chart, KPI breakdown, and specific recommendations — in seconds.
A manufacturer has three product lines. Product A has the highest revenue but a contribution margin of only 12%. Product C has lower revenue but 58% contribution margin. AskBiz recommends shifting production capacity toward Product C to improve overall profitability.
Upload your CSV or Excel file and ask "What is Contribution Margin? Plain English Explanation" — get the answer with a chart and recommendations in under 60 seconds.
Upload your data — free →No card required · 10 free questions · Results in seconds
No. Gross margin uses cost of goods sold (which may include some fixed manufacturing costs). Contribution margin uses only variable costs. Contribution margin is typically higher than gross margin.