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Contribution Margin
Definition
Revenue minus variable costs, expressed as a total or per-unit figure. Contribution margin reveals how much each unit sold contributes to covering fixed costs and generating profit, and is a key input in unit economics analysis.
Related Terms
Cap Table (Capitalisation Table)
Capital Deepening
Capital Expenditure (CapEx)
Capital Intensity Ratio
Capitalisation of Intangibles
Related FAQ
What is Gross Margin and Contribution Margin?
Gross Margin = (Revenue − Cost of Goods Sold) / Revenue. Contribution Margin = (Revenue − Variable Costs) / Revenue. Both measure profitability at different levels of cost allocation.
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