Several indicators help in business management and the contribution margin is an important indicator to help in decisive solutions, in special negotiations and essential for the company’s permanence in the business world. Next, we will talk a little more about the contribution margin and teach you how to calculate this indicator.
What is contribution margin?
The is the amount each product contributes in monetary terms to the maintenance of the company and to country email list the formation of the result. It seems like a simple calculation, but it requires experienced professionals in the market to arrive at this indicator.
Contribution margin calculation
The value is obtained using the following formula:
MC= RV – CV
MC= Contribution margin
RV = Total sales
CV= Total variable costs and expenses
The is nothing more how can your company benefit from complying with the lgpd? than the difference, plus, between the sales price and the variable costs and expenses related to the product or service sold. This indicator means how much each good or product contributes to paying the fixed costs and operating results of the company, such as: rent, depreciation, fixed salaries, licenses, permits and other expenses common to all products and to forming the result desired by the partners.
Contribution margin calculation applied to customers
When you are a service provider, you need to apply the calculation to your customers to find out how profitable they are. Once you have this indicator, you need to analyze your current customer base and identify which email list ones could be your potential customers . This way, you can focus on meeting the needs of customers who offer the highest return for the company. We will look at the LTV principle in later articles.
Customer profitability analysis involves calculating the costs of serving a given customer, thereby obtaining the contribution margin share of the company’s total profit. Identifying and understanding the contribution margin of your customer base makes it possible to cluster customers and understand which are the most and least “profitable”.
This analysis can bring many benefits to the company, since it is possible to offer more effective service and seek similar ones in the acquisition strategy, since through the contribution margin it is possible to outline the profile of the ideal customer and create outbound strategies , for example, focused on ideal customers to do business with.
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