Contribution Margin
Short definition
Contribution margin is sales minus variable costs — what remains to cover fixed cost and profit. Unit contribution is the pricing floor; it need not equal gross margin.
Detailed explanation
Gross margin uses IFRS COGS; if depreciation and production fixed cost sit in COGS, it diverges from contribution. Decision contribution is built from cash items that actually move with volume.
Negative contribution means each extra unit burns cash. Positive contribution rewards volume until fixed costs are covered — that is the source of DOL.
Why it matters for the CFO
Discounts, channel commissions and a materials shock eat contribution first. An EBITDA “improvement” from destocking may not be a real contribution gain.
How it is calculated
Katkı payı = Satış − Değişken maliyet; oran = katkı / satış
Total contribution covers fixed cost; unit contribution = price − unit variable cost. The ratio moves with price and mix.
Variables in the formula
- CM: contribution margin (total or unit)
How to read it
Contribution ratio varies by SKU and channel; the company average hides a loss-making SKU. Break-even = fixed / unit contribution.
Numerical example
Price 100 TL, unit variable 60 TL, fixed 8 mn TL: unit contribution 40 TL; break-even volume = 8,000,000 / 40 = 200,000 units.
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Definitions are educational. They are not investment, credit or tax advice.