Contribution Margin Formula: How to Determine Your Most Profitable Product
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The contribution margin determines if a product is profitable
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What is Contribution Margin?
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Contribution margin
definition is the difference between revenue and variable costs (sales revenue – variable costs).
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What are Fixed Costs?
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Fixed costs are expenses that do not fluctuate in prices or are a one-time-only expense.
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FORMULA
Contribution Margin Formula
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Contribution Margin = Net Sales Revenue minus Total Variable Cost
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If you’re ready to swim with the sharks, then you better
know your numbers
and understand how the contribution margin works!
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