Contribution Margin Ratio Calculator
Contribution margin as a share of revenue.
Contribution margin ratio
40.0%
$8,000 available for fixed costs
Break-even revenue is fixed costs divided by this ratio — the calculation that works when unit break-even cannot, because the catalogue is mixed.
How the Contribution Margin Ratio Calculator works
The ratio turns contribution margin into a percentage, which makes it usable across a whole catalogue rather than one product. Once you know what share of revenue is contribution, break-even revenue is a single division away.
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 ratio calculated?
Contribution margin ÷ selling price × 100, or equivalently (revenue − variable costs) ÷ revenue × 100. A £40 item with £24 of variable costs has a ratio of 40%.
How does it give break-even revenue?
Fixed costs ÷ contribution margin ratio. With £4,000 of monthly fixed costs and a 40% ratio, you need £10,000 of revenue to break even. This works across a mixed catalogue where a per-unit calculation cannot.
What is a good contribution margin ratio?
Higher is better, but the meaningful test is whether it covers fixed costs at achievable volume. A 20% ratio works fine at high volume with low overheads; a 60% ratio can still fail if fixed costs are heavy and sales are thin.
What is the variable cost ratio?
The mirror image: variable costs ÷ revenue. The two always sum to 100%. A 40% contribution margin ratio means a 60% variable cost ratio, and tracking whichever moves first is a useful early warning.