Weighted Average Contribution Margin Calculator

How it is calculated

Each product's contribution margin is price − variable cost per unit. The mix numbers (any scale, such as percentages or unit counts) are first turned into shares that add up to 1. The blended margin is the share-weighted sum of the three unit margins, and the blended price is the share-weighted sum of the three prices. Then CM ratio = blended CM ÷ blended price × 100 and break-even units = fixed costs ÷ blended CM, rounded up to a whole unit. Break-even revenue is the unrounded break-even units times the blended price. These are units of the composite package at your mix, not per product. If the blended margin is zero or negative, the tool shows "Never" because fixed costs can never be covered at that mix. Prices, costs and mix cannot be negative, and the mix cannot be all zero.

Common mistakes

• Entering the sales mix as revenue shares instead of unit shares: the weights must be shares of units sold, otherwise the blended margin per unit is wrong.
• Putting total cost, not variable cost, in the cost fields; fixed costs belong only in the separate fixed-cost field.
• Reading the break-even units as a figure for each product; it is the total across the three, split by your mix.
• Leaving a product's mix at 0 but still entering prices for it: it simply drops out of the average, so the blended numbers describe only the other products.
• Expecting the break-even revenue to equal the rounded units times blended price: revenue uses the unrounded units, so it can differ slightly.