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Contribution margin per unit

Contribution margin per unit

Contribution margin can be calculated on individual items, for instance on T-shirts versus jeans. This is done so as to exclude any goods that are not contributing towards an overall profit.

If the contribution margin should be negative on certain items, these must be defined as crucial items to lure the customer into the shop. A grocery store might rund a negative contribution margin on fruits and vegetables in order to attract customers. Ones in the shop, they will in most cases buy more expensive items.