Contribution margin ratio: Measuring Contribution as a Share of Revenue
The contribution margin ratio shows the portion of sales left after variable costs. It connects sales changes with the money available to cover fixed costs.
Use the Contribution margin ratio Calculator to enter your own figures and compare the result with the worked example below.
Contribution margin ratio formula
CM ratio = (Revenue − Variable costs) ÷ Revenue
Worked example
| Item | Example value |
|---|---|
| Revenue | 10000 USD |
| Variable costs | 6000 USD |
| Contribution margin ratio | 40% |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
Keep variable and fixed costs classified consistently. Gross margin and contribution margin need not use the same cost categories.
Related calculations
Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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