About this calculator
Enter the selling price and variable cost per unit, and optionally the units sold, to get contribution per unit, the contribution ratio and the total contribution.
How to use it
- Enter the price per unit.
- Enter the variable cost per unit.
- Optionally enter units sold.
The formula
Contribution = price − variable cost; ratio = contribution ÷ price × 100
- price
- selling price per unit
- variable cost
- cost that rises with each unit sold
Worked example
Price ₹500, variable cost ₹300, 1,000 units
- Contribution = 500 − 300 = ₹200 per unit.
- Ratio = 200 ÷ 500 = 40%.
- Total = 200 × 1,000 = ₹2,00,000.
What the result means
A higher ratio means more of every sale goes to covering fixed costs. Compare products by ratio to decide which to push.
Assumptions
- Variable cost per unit stays the same.
Limitations
- Fixed costs are not subtracted; use the break-even calculator for that.
Frequently asked questions
Is contribution margin the same as gross margin?
Not exactly. Gross margin uses cost of goods sold, which can include some fixed production costs; contribution uses only variable costs.
How is it used for break-even?
Break-even units = fixed costs ÷ contribution per unit.
Can contribution be negative?
Yes, if variable cost is above the price. Every sale then loses money.
Last reviewed on 1 October 2026. Found a mistake? Tell us.