Quick answer
Contribution margin quick answer
Answer: Contribution margin is the revenue left after variable costs and is the amount available to cover advertising, fixed overhead, and profit.
Formula: Contribution dollars = revenue − variable costs. Contribution margin % = contribution dollars ÷ revenue × 100.
Example: $80 revenue with $36.40 of variable cost leaves $43.60 contribution, or a 54.5% contribution margin.
Reviewed September 1, 2026 · Methodology
Worked example
$80 revenue with $36.40 of variable costs leaves $43.60 contribution, a 54.5% contribution margin.
What to do with the result
Contribution is what remains to cover ads, fixed overhead and profit. It is often a more useful operating number than gross margin alone.
Frequently asked questions
What is contribution margin?
Revenue remaining after variable costs associated with producing and fulfilling the sale.
Is contribution margin the same as net margin?
No. Fixed overhead and other expenses may still need to be paid from contribution.