Contribution Margin

Definitions

1. Revenue minus variable costs directly associated with delivering that revenue, showing how much is left to cover fixed costs and profit. It is a key lens for evaluating product or customer economics.

   In plain English: How much money is left after the direct variable costs of serving revenue are removed.

   Example: "The company grew quickly, but weak contribution margin made scaling expensive."

Related Terms

• Cost of Goods Sold
• Cost of Revenue
• Customer Acquisition Cost
• Gross Margin
• IRR
• LTV
• Market Maker
• AUM
• CAC Payback
• Call Option
• CLV
• Operating Leverage
• Operating Margin
• Payback Period
• Profit Margin
• Special Purpose Vehicle
• SPV
• Variable Cost