Contribution Margin
Contribution Margin (Deckungsbeitrag)
The contribution margin is the difference between sales revenue and the variable costs of a product or order.
Contribution Margin: Not to be confused with
The contribution margin is NOT the profit. Fixed costs still need to be deducted from the contribution margin before arriving at the actual profit of a product, order or company.
The contribution margin shows how much an individual product or order contributes towards covering fixed costs and generating profit, once variable costs have been deducted (Source 1, Source 2). It is usually compared as a pre- and post-calculation per order, to check whether the original costing held up against reality.
For export-heavy manufacturers, post-calculation additionally matters in foreign currency, since exchange rate swings can change the actual contribution margin per order, see the pain points on the Manufacturing page.