What is Contribution margin?
Price minus variable cost: what each sale contributes to fixed costs and profit.
Contribution margin can be per unit or as a percentage of the price. Once total contribution covers fixed costs, the rest is profit.
Formula
Contribution per unit = Price − Variable cost per unit · Contribution margin % = Contribution ÷ Price
Example
A room sold at $100 with $15 of variable cleaning and supplies contributes $85 (85%).
Why it matters
It tells you how many sales you need to break even and how much each extra sale is worth.
Free tool
Hotel Break-Even Calculator →
Lesson
Break-Even Analysis: How Many Rooms Does a Hotel Need? →
🏨 See it in a hotel game
Run a hotel in PlayLobbyboss and watch how contribution margin changes with every decision you make.
Play free — no download