Glossary
Contribution margin
Contribution margin is what is left of the selling price after variable costs, and it is what an item adds towards covering fixed costs.
What it means for a shop owner
Use it to decide which items deserve space and promotion. An item with a small margin that sells a lot can add more than a high-margin item that sells little. Multiply by quantity instead of looking at it alone.
A worked example
Item A sells for 10 with a variable cost of 7, so it contributes 3, and you sell 100: total 300. Item B contributes 8 and sells 20: total 160.
Related
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes