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

You can more easily understand the impact if you increase/decrease purchase costs such as:

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

How to use:

1. Choose sales model

   Go to Settings → Account settings, and click Contribution margin (CM) as your sales model:
   
   
   
   Choose whether to display CM by default, or click to show actual order value (you'll still be able to see CM). Then click Activate sales model:
   
   
   
   

2. Combine with recurring revenue

   You can also click the toggle to combine the CM with your chosen recurring revenue model. This is useful when you want to include the costs that come from generating your recurring revenue:
   
   
3. Scroll down and you can also set and activate when the fiscal year starts:
   
   

4. Set targets

   Click Targets → Contribution margin target (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:
   
   

5. Know CM for each unit

   Go to Settings → CRM → Products. Add a new product, or edit an existing product.  Click the cost tab to add the cost:
   
   

6. Measure

   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:
   
   
   
   

7. Results

   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.