Contribution margin is the dollars or percentage left from a sale after subtracting only the variable costs of producing it — the costs that scale up or down with each unit sold. Each dollar of contribution margin first covers fixed costs (rent, salaries, software) and only after fixed costs are covered does it become profit. It is the most useful number for pricing, mix, and break-even decisions.
Contribution margin separates variable costs (those that move with volume — materials, hourly labor, processing fees) from fixed costs (those that stay constant — rent, salaried staff, base software). For pricing decisions, contribution margin is the right number, not gross margin. If a $200 service has $80 of variable cost, every sale contributes $120 toward fixed overhead. Once enough sales have piled up to cover fixed overhead (the break-even point), every additional sale's full $120 drops to profit. This is why selling one more unit at a discount can still be the right call as long as the discounted price stays above variable cost — and why selling below variable cost is always wrong even if it generates revenue.
Contribution Margin (per unit) = Selling Price − Variable Cost per Unit Contribution Margin (%) = (Selling Price − Variable Cost) ÷ Selling Price × 100
Contribution margin tells you what your unit economics actually are. It is what every pricing decision should be measured against. Should you take a discounted job? If the price is above variable cost, you gain contribution toward fixed overhead even at a discount. Should you keep a product line? If contribution is negative, every sale loses money — kill the line. Should you spend more on customer acquisition? Compare lifetime contribution margin to acquisition cost, not lifetime revenue. Owners who think in revenue make worse decisions than owners who think in contribution.
Fynso builds a contribution margin view by service line, customer, and channel, separating variable from fixed costs in your accounting data. When you're considering a pricing change, a new service, or a discount, Fynso surfaces the contribution math directly — "this discount drops contribution margin from 60% to 38%, breakeven volume rises by 31%." The same model runs against every active customer so you can see which customers contribute meaningfully and which are net drags after fully-loaded variable cost.
Restaurants
A $24 entree with $7 of food cost and $3 of variable labor has a $14 contribution per plate. If fixed costs are $42,000 per month, the restaurant breaks even at 3,000 covers per month. Knowing the per-plate contribution makes daily volume decisions tactical rather than emotional.
Service businesses
A cleaning company charges $180 per residential job with $60 of crew labor and $12 of supplies — $108 contribution per job. With $18,000 monthly fixed costs (office, insurance, owner salary), the business needs roughly 167 jobs to break even. Every additional job above that adds $108 of operating profit.
SaaS
A B2B SaaS at $99/month subscription has roughly $8 in hosting and payment processing variable cost, leaving $91 contribution per subscriber per month. Customer acquisition cost (CAC) of $400 pays back in about 4.4 months of contribution — which is the most important unit-economics number for the business.
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