Startup Funding Espresso Contribution Margin vs. Gross Margin
Contribution Margin vs. Gross Margin Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. The contribution margin is the same as the gross margin but without the fixed costs included. It includes only direct costs and variable costs. This means the contribution margin will always be the same or higher than the gross margin. The contribution margin is used for setting the selling price of a product and determining the profitability of the product. Fixed costs are considered sunk costs and should not be used in the calculation of product prices. Contribution margin can be used to understand the profitability of each product as it eliminates non-direct costs from the equation. The profits from the contribution margin calculation can be applied to the company\u2019s overhead. Consider using contribution margin in your pricing and product performance calculations. \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .