57.1429 is the example result. Read it using the units and relationship stated below.
Price Floor uses variable cost per unit, minimum contribution margin.
Protecting contribution before accepting a price
For price floor, the relationship is Result = (([Variable cost per unit]) ÷ (1 − [Minimum contribution margin] ÷ 100)). The amount depends on the supplied variable cost per unit, minimum contribution margin, rather than a live market price or a value imported from another record. A quote can meet a revenue target and still leave too little to cover delivery. Separate the selling-price denominator from the cost denominator: margin and markup answer different questions. A discount changes contribution even when the supplier cost stays fixed.
What the model includes
Result = (([Variable cost per unit]) ÷ (1 − [Minimum contribution margin] ÷ 100)) A pricing review should retain the supplier cost, sale price and the reason for any allowance. Returns, payment charges, delivery and tax require explicit treatment; they should not disappear inside a percentage labelled profit. Compare the proposed price with the customer agreement and delivery capacity. A mathematically achievable margin does not establish that buyers will accept the offer.
Example with the supplied inputs
Variable cost per unit: 40; Minimum contribution margin: 30. Result: 57.1429. The values are illustrative.
Compare one changed input
Variable cost per unit changes from 40 to 44. The result becomes 62.8571. All other inputs remain fixed.
Calculation rule
Result = (([Variable cost per unit]) ÷ (1 − [Minimum contribution margin] ÷ 100))
Inputs and output
| Input | Example value | Entry convention |
|---|---|---|
| Variable cost per unit | 40 | Use variable cost per unit on the currency and period basis shown by the formula. Keep gross amounts, net amounts and unit amounts distinct; the page does not fetch a price or exchange rate. |
| Minimum contribution margin | 30 | Use the source quantity represented by minimum contribution margin. Keep the counted population fixed and avoid mixing a unit value with a period total. |
Output: 57.1429 is the example result. Read it using the units and relationship stated below. Use the formula to distinguish a cash amount, count, percentage or ratio.
How to use the page
Collect the inputs
Gather Variable cost per unit, Minimum contribution margin. Use one period and the units shown in the form.
Run the calculation
Enter the values and select the action. The calculation rule above explains how the inputs produce the result.
Compare a scenario
Change Variable cost per unit on its own, keeping the other inputs fixed. Read both results before changing another assumption.
Worked example
With the example inputs listed above, the result is 57.1429.
Change Variable cost per unit from 40 to 44 while keeping every other value fixed. The result becomes 62.8571. This comparison isolates that input; it does not forecast how other variables will respond.
Check the stated formula, units and limits before using the result in a decision.
Keep the displayed formula, input units and model scope with the result. Corrections or questions can be sent through the request section on this page.