In this guide
05 · Pricing and unit profitability
Calculate how much each sale contributes to fixed expenses.
Put it into practice
- List the variable cost of each sale
- Calculate contribution at different prices
- Compare break-even volume with realistic capacity
Further reading: Investor.gov · Kâr tanımı ↗
Distinguish margin from markup
Illustrative unit cost is 60 and selling price is 100. Contribution before fixed costs is 40. Margin is 40 ÷ 100 = 40%; markup is 40 ÷ 60 = 66.7%. A 40% markup on 60 gives a price of 84, not 100.
Your worksheet
Price; variable cost; payment fees; returns allowance; contribution; fixed costs.
Check your work
Include your own labour where relevant. A positive unit contribution does not prove the whole business is profitable.
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