Contribution margin calculation

The contribution margin allows conclusions to be drawn about the success of a company’s price calculation. It is a cost and performance calculation that shows what contribution is available to cover fixed costs. To do this, the production costs of a product are subtracted from the sales it has generated. The result is the amount available to the company to cover fixed costs. This amount should be at least equal to the amount of fixed costs in order to reach the break-even point and, in the best case, exceed it so that the product turns out to be profitable for the company.