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Exact(2)
Typically you want to see a 3x ratio between the contribution margin per rep (factoring in the lifetime value of the customer, or LTV) and the cost per rep to acquire that customer, fully loaded (i.e., customer acquisition cost or CAC).
In our example above, the contribution margin per baseball was $1.00 and the price was $3.00.
Similar(58)
Since the contribution margin is $1.00 per baseball, we might try to simply sell 500 more baseballs.
Calculate the contribution margin, or the variable profit per unit sold.
Footballs are more expensive to produce at $4 per ball but sell for $8 per ball, giving a greater contribution margin of 8-4= $4.00.
Perhaps even more impressive: Xu said the company became "contribution margin positive" in the last year, which means that it's profitable on a per-order basis.
Assuming a 60% contribution margin, we estimate every $10m of incremental Replagal sales (taxed at 23%) would add 1% to 2009 earnings per share.
Also, the companys contribution margin shows strength.
Capacity (fixed) cost/unit contribution margin.
Payback Ratio: Cumulative contribution margin within 18 months ≥ 2*CAC.
We make money both on a gross margin basis and a contribution margin basis.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com