LexiconEconomics

Contribution margin

هامش المساهمة

Canon · Doctrine 2.0Added in version 1.0

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/

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