contribution margin


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Contribution margin

The difference between variable revenue and variable cost.

Contribution Margin

The profit a company makes on a product calculated by subtracting its variable revenues from its variable costs. Because variable revenues and costs are largely dependent on the business cycle, a company with a high contribution margin is likely to have an even higher margin during economic expansion.

contribution margin

The price at which a firm sells its product less the variable cost of producing the product. A company with a large contribution margin is likely to experience substantial profit increases during an economic upswing.
References in periodicals archive ?
Restaurant contribution margin was 15.0% in the first two quarters of 2019, compared to 14.2% in the first two quarters of 2018.
Wholesale service revenues were $181 million, a decrease of 5 percent from the same period a year ago, and contribution margin was $127 million compared to $133 million a year ago.
After calculating the contribution margin, divide the fixed costs of the equipment by the contribution margin.
According to ICRA estimates, with the new ethanol prices, the total contribution margin is likely to increase by around Rs.
The contribution margin is the proportion of the selling price that contributes to fixed costs.
This is structured as an initial payment of GBP 9.15m (subject to working capital adjustment at completion) and an earn out payment of GBP 1.85m (subject to adjustment) on the first anniversary of completion dependent upon Brand Architekts achieving a maximum contribution margin (measured on a consistent basis) of GBP 4.187m during the 12 months from completion.
Whatever aggregated approach was used, the group agreed that a contribution margin reporting approach to the profitability presentation was most enlightening for management.
The primary vehicle for understanding SIC's structural problems and its attendant solutions is the contribution margin income statement that is presented as an appendix to this article.
And in Q3, our mobile phones business delivered a solid quarter with sequential sales growth and improved contribution margin."
The improvement in EBITDA reflects the contribution margin from increased revenue, continued efficiencies resulting from operational improvements, and the absence of non-recurring items, including a commercial settlement charge, in the prior year period.

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