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Thought Leadership from the Leaders in Virtual Accounting and Bookkeeping Services
3, March

How to Understand Contribution Margin and Gross Profit Margin

When companies want to increase profits, it's best to study the contribution margin and the gross profit margin. This is how unit economics is revealed. Unit economics reveals the relationship between the cost to generate revenue and revenue itself. Once you know the unit economics, you can then increase profits. It reveals which industries deliver the most profits, which marketing campaigns delivered the most profits and which sales people deliver the most profits. Unit economics gives companies full visibility into what specifically is making the profits. This way, decisions can be made to increase profits.

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