Definition
Contribution margin is the revenue remaining after deducting variable costs, used to cover fixed costs and generate profit. It helps businesses determine product profitability.
Related Services
Financial analysis, pricing strategy consulting, and cost management services assist businesses in optimizing contribution margins.
Problem and Application
Companies with low contribution margins may struggle to cover fixed costs and achieve profitability. Proper analysis helps in pricing, cost control, and strategic decision-making.
Conclusion
A strong contribution margin is critical for financial health. Businesses should continuously monitor and optimize their pricing and cost structures to improve profitability.
