Contribution Margin

Definition

Revenue minus ALL variable costs — COGS plus variable selling costs such as ad spend. What each additional unit of business contributes toward fixed costs and profit.

Formula

Contribution = Revenue - Variable costs
Contribution Margin % = Contribution / Revenue

Worked Example

Revenue $88,000, COGS $21,000, variable ad spend $11,000:

Contribution = $88,000 - $21,000 - $11,000 = $56,000
Contribution Margin = 63.6%

Per-customer view: ARPU $42.00, variable cost $10.66
Contribution per customer = $31.34/month

Interpretation & Pitfalls

Contribution per unit is the denominator of break-even analysis and CAC payback. If contribution per unit is negative, growth multiplies losses.

In TupicFinance

Per-customer contribution is derived from ARPU and per-customer COGS in the unit-economics views.