Weighted Average Contribution Margin Calculator

About this calculator

Contribution margin per unit is the selling price minus variable cost — the amount each unit sold contributes toward covering fixed costs and generating profit before any allocation of overhead. When a business sells more than one product, a single blended figure is more useful than looking at each product's margin separately, so the weighted average contribution margin multiplies each product's per-unit contribution margin by its share of the total sales mix and sums the results.

Managers and financial analysts use this blended figure in cost-volume-profit analysis to calculate a company-wide break-even point in units or revenue, to judge whether a shift in the sales mix toward lower-margin products is quietly eroding profitability, and to decide which products deserve more marketing or shelf space. Because the sales mix weighting matters as much as the individual margins, the same two products can produce very different blended margins depending on how much of each actually sells.

This calculator takes the price, variable cost and sales mix share of two products and returns the weighted average contribution margin per unit, so you can see the true blended economics of your product line rather than an unweighted average.