Contribution Margin

Contribution margin is what a single sale contributes towards covering your fixed costs and profit, after its own variable costs are paid. Take the price, subtract the variable cost of that specific unit (delivery, payment fees, support hours), and what remains "contributes" to the overhead that exists whether you sell one unit or a thousand.

It is one of the most practical numbers a founder can hold, because it answers "does selling one more of this actually help me?" If a product has positive contribution margin, every extra sale pushes you towards covering rent, salaries and software. If it is negative, you lose money on every unit and selling more makes things worse, no matter how good the revenue looks.

The trap is that the variable costs are scattered, so you never feel them. Say you bill clients through Moneybird: the invoice shows 500 EUR, but the payment-processing fee, the VAT handling and the odd write-off all live in different places, and only when you pull them together do you see the real margin on that job. Say you run a support-heavy plan and your team handles calls on Aircall: the per-minute call cost and the agent hours are a genuine variable cost that eats the margin on your noisiest customers, even though the subscription price looks identical to everyone else's. And say you want to watch this over time rather than once a quarter, you can wire revenue and cost feeds into a Databox board so contribution margin per product or per customer sits on screen, revealing which parts of your business carry the rest and which quietly drain it, so you can drop the losers and double down on the earners.