Contribution margin
Price minus variable cost per unit. What each sale contributes toward fixed costs and profit.
Where it is explained in full
Break even and runway: two numbers every owner should be able to say aloud. How many sales before the business stops losing money, and how many months of cash are left if nothing changes. Both are simple. Both are routinely unknown.
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Words beside it
- Catch up contribution
Extra you may put into retirement accounts once you reach 50.
- contribution
The money you actually put into an account like an IRA in a given year. The government sets a maximum dollar amount you are allowed to add each year.
- contribution limit
The maximum dollar amount the government allows you to put into a certain account in a given year.
- direct contribution
A direct contribution is when you put money straight into an account without any extra steps in between. For example, putting money right into a Roth IRA without converting it from another account first.
- Gross margin
Revenue minus the direct cost of what was sold, as a percent of revenue.
- Margin
Borrowing from a broker to hold a position, or the collateral required for it.
- Margin call
The broker demanding cash or selling your holdings because your borrowing got too large.
- Marginal tax rate
The rate on your last dollar of income. The rate that matters for most decisions.
Ask about Contribution margin
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