Tool

Contribution Margin Calculator (free Google Sheets template)

Coefficient Freemium Beginner

Before you argue about pricing, you need one number: what is left from each sale after variable costs. This free calculator does exactly that, computing contribution margin per unit (in their example a 150 dollar coffee maker leaves 72 dollars per sale), and you can copy it into your own Google Sheets to plug in your real costs. A practical way to check you are not accidentally pricing below cost, and to see how much room a discount actually leaves you.

  • Contribution margin per unit is just selling price minus variable cost per unit: the money each sale leaves toward fixed costs and profit.
  • Copy it into your own sheet so you can swap in your real material, shipping, and payment-fee costs instead of sample numbers.
  • If contribution margin per unit is zero or negative, you are selling below cost and no volume fixes that.

The question it answers

  1. How do I price my product so I'm actually making money and not accidentally selling below cost?

Read with it

  1. When you are the only one selling something like your product, cost-plus and competitor benchmarks give you nothing to anchor... Wiley (2016) Book · Book, ~240 pages Monetizing Innovation: How Smart Companies Design the Product Around the Price Madhavan Ramanujam and Georg Tacke
  2. Most pricing advice tells you to look at competitors, but this essay from David Sacks (Craft Ventures, ex PayPal COO) makes you... Craft Ventures Essay The Gross Margin Problem: Lessons for Tech-Enabled Startups David Sacks
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