# Contribution margin

> Contribution margin is a profitability metric, calculated as (Revenue − Variable costs) ÷ Revenue. Strictly the ratio form — the amount is Revenue − Variable costs. Variable-cost classification is a judgment; state it.

Source: https://lopifi.com/glossary/contribution-margin
Part of: Lopifi — US GAAP books on autopilot, reviewed by a CPA (https://lopifi.com)

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**What is contribution margin?** Contribution margin is a profitability metric, calculated as (Revenue − Variable costs) ÷ Revenue.

## Formula

`(Revenue − Variable costs) ÷ Revenue`

## Note

Strictly the ratio form — the amount is Revenue − Variable costs. Variable-cost classification is a judgment; state it

- **Category:** Profitability
- **Specified in:** [Metric definitions](https://lopifi.com/md/docs/domain/10-metrics)
- **Related:** revenue