Contribution Margin Calculator
What each sale contributes toward fixed costs.
Contribution margin per unit
$16.00
40.0% of the price
How the Contribution Margin Calculator works
Contribution margin is what one additional sale contributes toward your fixed costs, once the variable costs of making and delivering it are paid. It is the number break-even analysis is built on, and the right basis for deciding whether a marginal order is worth taking.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How is contribution margin calculated?
Selling price per unit minus variable cost per unit. On a £40 item with £15 of materials, £5 of fulfilment and £4 of transaction fees, contribution margin is £16 — that is what each sale puts toward rent, salaries and everything else fixed.
What counts as a variable cost?
Anything that changes with volume: materials, per-unit manufacturing, packaging, shipping, payment processing and marketplace commissions. Rent, salaries, software subscriptions and insurance stay the same whether you sell ten units or a thousand.
Why use contribution margin instead of gross margin?
Gross margin only subtracts cost of goods. Contribution margin subtracts every variable cost, including fees and shipping, which for an online seller are substantial and genuinely volume-linked. It gives a truer picture of what an extra sale is worth.
Can contribution margin be negative?
Yes, and it is a serious signal — it means every additional sale loses money before any fixed cost is touched. Selling more makes things worse. Loss leaders are the deliberate exception, justified only if they reliably pull profitable attached sales.