Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff. Contribution margin is used to ...

When a business wants to calculate exactly how much revenue it earns from the sale of its products, it looks at the contribution margin ratio. The contribution margin ratio tells a company how much ...

Both metrics assess a company's profitability, but in different ways Claire Boyte-White is the lead writer for NapkinFinance.com, co-author of I Am Net Worthy, and an Investopedia contributor.

The concept of a contribution margin comes from the need for business managers to understand how profitable their businesses have become. For most managers, this is as simple as looking at something ...