Contribution Margin Calculator
Contribution Margin Calculator Explained:
(a) What is this? This calculator tells you what percentage of net sales is availabe to pay direct costs and profit.
(b) What does this tell me? Retailers use this measure to determine how much money is left to contribute towards direct costs and profit. As an example, if you had a contribution margin of 40%, then from every dollar of sales, 40c is left for costs and profit. It is often used for those analyzing sales and prices.
(c) Why should I use it? To help you assess whether products might be added or deleted from your product range, or to assist with determining pricing.
(d) Caution: This calculator only tells you what is left to contribute towards costs and profit. It doesn't tell you if you actually make a profit. It typically doesn't tell you the dollar profit either. You use this calculator at your risk.