Contribution margin (CM) is useful for seeing profitability for specific products or product groups, after subtracting variable costs.

You can explore the impact if you increase/decrease purchase costs such as:

• Volume of production 
• % of discounts and commissions
• Costs of overheads

1. Choose the sales model by selecting Settings → Account → Account settings, and clicking Contribution margin (CM) under Sales model:
   
   
   
    

2. Choose Show contribution margin to display CM by default, or Show actual order value (you'll still be able to view CM). Then click Activate sales model:

   
   
    

3. If your account has the Subscriptions add-on, you can also combine CM with a recurring revenue model. Turn on Combine with the annual recurring revenue (ARR) sales model or Combine with the monthly recurring revenue (MRR) sales model. This is useful when you want to include the costs that come from generating your recurring revenue. With a combined model you can also set Subscriptions and One-off targets:
   
   
4. Scroll down to Fiscal year and turn on Activate fiscal year to set when your fiscal year starts. Do this before you set targets: activating the fiscal year or changing its start month clears all your current and future targets:
   
   
5. Go to Settings → CRM → Targets and click Contribution margin (this only appears after you've chosen CM as your sales model in Step 1, and then refreshed):
   
   
   
   You can now set contribution targets for each of your users:
   
   
   
   The progress bar (desktop users: it's on the top-right of your screen) shows how close you are to reaching your CM targets at all times:
   
   
   
   Click this progress bar to see performance breakdown by month, quarter or year:
   
   
6. Go to Settings → CRM → Products. Add a new product, or edit an existing product.  Click Cost to add the cost:
   
   
7. Go to your sales board. You can now click to view sales performance by CM or actual value:
   
   
   
   Within your deals and opportunities, you can see the impact of purchase cost on your CM and your sales, subscriptions or opportunities. Try changing the amount or discount. Upsales automatically updates your net amount.
   
   You can also quickly change the purchased cost for individual orders, without having to change the default purchased costs. This works across your reports, such as targets, opportunities, and contacts:
   
   
    
8. Knowing the profit per unit means you see which product lines units are profitable. You can more accurately model "What-if" scenarios around variable cost changes. Plus you can measure performance per user, for sales and also profit