LexiconEconomics
Contribution margin
هامش المساهمة
Definition
Contribution margin is a branch's revenue minus cost of goods, branch labour, rent and channel commissions, divided by revenue, measured before group overhead. It shows what each riyal of branch sales leaves to cover head office and return capital, and it is the base for net contribution, payback and the Geographic Replication Index.
In plain words
How much of each riyal a branch sells is left after the branch's own costs.
Also searched as
- branch contribution margin
- CM
- margin after rent
- هامش المساهمة
Formula
Contribution margin = (Revenue − COGS − Branch labour − Rent − Channel commissions) ÷ Revenue
Where it is used
In the Doctrine and the Playbook
Related terms
Should I open a new branch? Run the numbers
How to cite this definition
Alhajj, S. (2026). “Contribution margin”. In The Revenue Engineering Lexicon, version 1.0. Riyadh. https://seiflden.com/lexicon/contribution-margin/