Contribution margin

IGC-DEFINITION (abbreviated)

Contribution margin / Deckungsbeitrag
The contribution margin may be defined as the surplus of net revenue over the costs clearly entailed without allocating structure costs using a key. Contribution margin I (CM I) is calculated by subtracting the proportional costs of sales (product costs) from the net revenue. CM I demonstrates how much the individual article, the product, etc. contributes towards covering the structure costs of a business as well as towards the profit. It is the yardstick for assessing a product’s profitability.

from: IGC-Controller-Wörterbuch, International Group of Controlling (Hrsg.)

Source

IGC-Controller-Wörterbuch, International Group of Controlling (Hrsg.), 4. Auflage, Schäffer-Poeschel, Stuttgart, 2010