how to improve contribution margin
based on the contribution margin formula there are two ways for a company to increase its contribution margins they can find ways to increase revenues or they can reduce their variable costs variable costs tend to represent expenses such as materials shipping and marketing companies can reduce these costs by identifying alternatives such as using cheaper materials or alternative shipping providers alternatively the company can also try finding ways to improve revenues for example they can simply increase the price of their products however this strategy could ultimately backfire and hurt profits if customers are unwilling to pay the higher price 