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Accounting · Definition
Revenue minus variable costs — what each sale contributes to fixed costs and profit.
Contribution margin deducts only variable costs from revenue, leaving the amount available to cover fixed costs. It answers whether an individual product, order or customer is worth having.
It differs from gross margin by excluding fixed production and overhead costs. For pricing decisions on marginal volume, contribution is the more useful number.
Contribution margin = Revenue − Variable costs
Expressed per unit or as a percentage of revenue.
Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 257 glossary terms describe things the platform actually does.