Definition
Contribution margin is the amount remaining after variable costs are subtracted from sales revenue. Founders reach for it when a vague conversation needs a shared, specific meaning. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
You know Contribution margin is doing work when it changes a weekly choice — price, hire, channel, or kill. The working definition: Amount remaining after variable costs are subtracted from sales revenue.
Common mistake
Using Contribution margin as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Contract manufacturing
Outsourcing production to third-party manufacturers under contract.
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Contractual joint venture
Business partnership based on a contract rather than shared ownership.
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Control group
Group in an experiment that doesn't receive the treatment being tested.
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Convertible bond
Bond that can be converted into a specified number of company shares.
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