Contribution Margin Calculator: Revenue Less Variable Cost
Calculate the contribution margin — the share of revenue left after variable costs, available to cover fixed costs and then profit.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Profit margin | Markup | Profit |
|---|---|---|---|
| $120k rev · $78k variable | 35.00% | 53.85% | $42,000.00 |
| $50k rev · $20k variable | 60.00% | 150.00% | $30,000.00 |
| $300k rev · $255k variable | 15.00% | 17.65% | $45,000.00 |
| $40k rev · $46k variable | -15.00% | -13.04% | -$6,000.00 |
How This Calculator Works
Enter revenue and variable costs — the costs that move with sales volume, such as materials, packaging, and commissions. The calculator subtracts variable cost from revenue to find the contribution, then expresses it as a margin. What remains contributes toward fixed costs, and once those are covered, toward profit.
The Formula
Profit Margin and Markup
Markup = (Revenue − Cost) / Cost × 100 — the same profit measured against cost instead of revenue
Worked Example
A product line with $120,000 of revenue and $78,000 of variable costs has a $42,000 contribution. That is a 35% contribution margin — 35 cents of every sales dollar is available to cover rent, salaries, and other fixed costs before any profit is earned.
Key Insight
Contribution margin, not gross or net margin, drives break-even analysis. Dividing fixed costs by the contribution margin tells you exactly how much revenue you must generate before the business starts making money.
Frequently Asked Questions
What is contribution margin?
Contribution margin is revenue minus variable costs, expressed as a percentage of revenue. It is the portion of each sale that contributes toward fixed costs and, beyond that, profit.
What are variable costs?
Variable costs change with how much you sell — materials, packaging, shipping, payment processing, and sales commissions. Fixed costs such as rent stay the same regardless of volume.
How is contribution margin different from gross margin?
Gross margin subtracts the cost of goods sold, which can include some fixed production costs. Contribution margin subtracts only variable costs, which makes it the right tool for break-even and pricing decisions.
How does contribution margin relate to break-even?
Break-even revenue equals fixed costs divided by the contribution margin. The higher the contribution margin, the less revenue you need to cover your fixed costs.
Can contribution margin be negative?
Yes. If variable costs exceed revenue, every sale loses money before fixed costs are even considered — a sign the price is too low or variable costs are out of control.
Related Calculators
Data Sources & Benchmarks
This calculator draws on 3 independent, dated sources.
Methodology & Review
Contribution is revenue minus variable costs, expressed as a margin against revenue. The calculator reflects only the figures entered; fixed costs are deliberately excluded because contribution margin measures what is available to cover them.
Written by Ugo Candido · Last updated May 17, 2026.