Finance Tools
Contribution Margin Cost Shock Calculator
Calculate contribution margin and operating profit impact from a variable cost increase, including break-even units before and after the shock.
Measure how a variable cost increase affects your contribution margin, break-even units, and operating profit.
Revenue per unit.
Cost that scales with each unit produced/sold.
Example: 8 means +8%.
Calculated from the shock inputs.
Units for the same period as fixed costs.
Rent, salaries, overhead for the same period.
Contribution margin
CM/unit before: $14.00 (35.00%)
CM/unit after: $11.92 (29.80%)
Change: -$2.08
Break-even volume
Break-even units (before): 12,858
Break-even units (after): 15,101
Increase needed: 2,244
Operating profit
Operating profit before: $100,000
Operating profit after: $58,400
Change: -$41,600
Operating profit declines because variable costs increased.
How it works
- Contribution margin per unit = price − variable cost.
- Total contribution margin = CM/unit × units sold.
- Operating profit = total CM − fixed costs.
- Break-even units = fixed costs ÷ CM/unit.
FAQ
Is this the same as gross margin?
Not exactly. Gross margin often includes some semi-fixed costs. Contribution margin focuses on variable costs to link directly to break-even.
What if sales volume changes when prices change?
This tool assumes price is unchanged and volume is fixed. Use pricing + elasticity tools to model demand effects.
How to use this contribution margin cost shock calculator
- Enter selling price per unit and current variable cost per unit.
- Enter variable cost increase (% or $ per unit).
- Enter units sold and fixed costs for the same period.
- Review contribution margin, operating profit, and break-even units before and after.
Example
Price is $40, variable cost is $26, units sold are 20,000, fixed costs are $180,000. Variable cost rises by 8%.
- New variable cost = 26 × 1.08 = 28.08
- CM/unit before = 40 − 26 = 14.00
- CM/unit after = 40 − 28.08 = 11.92
- Break-even units = fixed costs ÷ CM/unit
More tools in Finance Tools
- Input Cost Increase Break-Even Calculator
Calculate the maximum input cost increase a business can absorb before profit falls to zero.
- Price Increase vs Volume Drop Break-Even Calculator
Calculate how much sales volume can drop after a price increase while keeping total gross profit (or contribution profit) the same.
- Required Volume Increase to Offset Cost Inflation Calculator
Calculate how much sales volume must increase to offset higher input costs and maintain the same total profit when prices cannot be raised.
- Required Price Increase to Offset Cost Inflation Calculator
Calculate the required price increase to keep the same total profit after unit costs rise, assuming sales volume stays constant.