Contribution margin is the revenue left after variable costs. Learn how contribution margin drives unit economics decisions.
Contribution Margin is Revenue − Variable Costs, often expressed per unit or as a percentage of revenue. Unlike gross margin, it strictly isolates variable costs, making it the cleanest unit-economics indicator. In a KPI tree, contribution margin sits between revenue and operating profit and answers the question: does each additional unit sold make money before fixed costs? Negative contribution margin is a structural problem that volume cannot fix.