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  4. Contribution Margin

Contribution margin

Revenue minus variable costs, before fixed costs.

Interpretation

Shows cash generated by each unit/customer to cover fixed costs and growth.

Worked example

Revenue $100; Variable costs $30 → Contribution margin = (100−30)/100 = 70%.

Common pitfalls

Treating fixed headcount as variable; excluding third‑party API costs; ignoring payment fees.

How to show in your deck

Financials slide: show gross vs contribution margin; tie to payback math.

Deck snippet

Contribution margin 70% at scale (APIs + payments in COGS).

Formulas

Contribution margin (%)
((Revenue - Variable costs) / Revenue) x 100%

FAQs

Related

Gross marginSeePayback periodSee