Enjoyed the video? Then subscribe to the channel now, and watch the related video on break even analysis next: kzbin.info/www/bejne/qGmleq1rfpKUesU
@monicagiovannaasturias8532 жыл бұрын
I was having a hard time understanding the contribution margin and this video just saved me! Thank you very much. New subscriber here
@TheFinanceStoryteller2 жыл бұрын
I am so happy to hear that, Monica! Welcome! Hope you find many more useful videos on this channel.
@horodetskaanna57665 жыл бұрын
Great explanation, and I love the giraffe !
@nadiyaahmed98384 жыл бұрын
The best one I saw yet ! I've got the concept, thankyou so much !
@TheFinanceStoryteller4 жыл бұрын
You're welcome! Very happy to hear that!
@waleeedz2 жыл бұрын
The best video explain ever seen regarding contribution margin Keep going
@TheFinanceStoryteller2 жыл бұрын
Thank you very much, Waled! Please spread the word!!!
@suhas2813 жыл бұрын
Finally understood after so many videos.Thank you Sir
@TheFinanceStoryteller3 жыл бұрын
Happy to help!!! :-)
@bengriffiths50964 жыл бұрын
This is a very straightforward explanation! I have subscribed!
@TheFinanceStoryteller4 жыл бұрын
Welcome aboard, Ben! :-)
@josephkaolinhugo76203 жыл бұрын
I think you just implicitly discussed the break-even point. This video is really helpful. Thanks!! FC/P-VC
@TheFinanceStoryteller3 жыл бұрын
Yeah, it's hard to discuss one without the other. ;-) I did make a separate video on break even analysis as well though: kzbin.info/www/bejne/qGmleq1rfpKUesU
@phuonguyen24244 жыл бұрын
THANK YOU SIR YOU SAVED MY LIFE
@TheFinanceStoryteller4 жыл бұрын
Happy to help!
@erikan26802 жыл бұрын
SUCH. a wonderful explanation!! Thank you so much.
@TheFinanceStoryteller2 жыл бұрын
Glad you enjoyed it, Erika! Thank you very much for watching and commenting.
@barackobama37193 жыл бұрын
i dont know what i would do without you hahahaha thank god for this channel
@TheFinanceStoryteller3 жыл бұрын
Nice to have enthusiastic fans!!! :-)
@moondust59674 жыл бұрын
it is really very much, understandable and clear. You don't speak fast and it is perfect. I liked very much the video and learnt really very smoothly. Thank you Sir. But with money no Sir, sorry - I cant afford
@TheFinanceStoryteller4 жыл бұрын
Thank you for the kind words, Sunny!
@thechoniclesofkratos2 жыл бұрын
Thank you so much from the Caribbean
@TheFinanceStoryteller2 жыл бұрын
Happy to help! Greetings back from the Netherlands.
@yinyin76142 жыл бұрын
Thank you for the clear and simple explanation. Very helpful.
@TheFinanceStoryteller2 жыл бұрын
I am so happy that you are watching so many of my videos, and enjoying them!!!! Thank you.
@nandinibansal91153 жыл бұрын
Thanku so much for this video it cleaned all my doubts.....thanks a lot😊
@TheFinanceStoryteller3 жыл бұрын
Most welcome 😊
@lanapearlwilson4828 Жыл бұрын
Great explanation
@TheFinanceStoryteller Жыл бұрын
Glad it was helpful!
@ruhanhansuka51496 ай бұрын
Thank You for the simple & easy explanation!
@TheFinanceStoryteller6 ай бұрын
Glad it was helpful, Ruhan!
@etavonnibusinessservices84562 жыл бұрын
This is very helpful, I think I understand the concept now....thanks
@TheFinanceStoryteller2 жыл бұрын
You are welcome! Thank you for watching and commenting.
@Full_Poulet9 ай бұрын
Excellent, thank you gladly, kind ser!
@TheFinanceStoryteller9 ай бұрын
Happy to help!
@motivatingyou26912 жыл бұрын
Amazing and simple explanation thank you
@TheFinanceStoryteller2 жыл бұрын
Glad it was helpful!
@avibhau38524 жыл бұрын
You are brilliant. You are a legend👏
@TheFinanceStoryteller4 жыл бұрын
Thanks for the compliments! Happy to help. Please subscribe to the channel! I have a related video on the break-even point which might be useful for you as well: kzbin.info/www/bejne/qGmleq1rfpKUesU
@АлександрСударев-д6н2 жыл бұрын
so touching for an excellent video
@TheFinanceStoryteller2 жыл бұрын
Thank you!
@boagokeetshabe15063 жыл бұрын
THANK YOU!!!
@TheFinanceStoryteller3 жыл бұрын
You're welcome!
@afifaali16522 жыл бұрын
Thank you for your good explanation 🙂
@TheFinanceStoryteller2 жыл бұрын
You're welcome 😊
@vanshshah77812 жыл бұрын
Thank you.
@TheFinanceStoryteller2 жыл бұрын
You're welcome!
@subastuanmakoto1379 Жыл бұрын
Thank you 😭love uuuuuuu❤️
@TheFinanceStoryteller Жыл бұрын
You're welcome 😊
@mdanwarhossain26072 жыл бұрын
Thanks for video now i can get this.
@TheFinanceStoryteller2 жыл бұрын
Wonderful to hear that!!! Thank you for watching and commenting.
@1desareflournoy Жыл бұрын
THANK YOU
@TheFinanceStoryteller Жыл бұрын
Happy to help!
@amoghguragai3 жыл бұрын
Greatly explained loved it thank you so much😊😊
@TheFinanceStoryteller3 жыл бұрын
Glad it was helpful! I have some related videos that could be interesting for you as well, on break even analysis kzbin.info/www/bejne/qGmleq1rfpKUesU and how to read an income statement kzbin.info/www/bejne/fqKQZWeGfcx0n7c Enjoy!
@annaharpe88433 жыл бұрын
thank you
@TheFinanceStoryteller3 жыл бұрын
You're welcome!
@areej22402 жыл бұрын
Thank you soo muchh
@TheFinanceStoryteller2 жыл бұрын
Welcome 😊
@CazLivingstone5 жыл бұрын
Brilliant thank you.
@TheFinanceStoryteller5 жыл бұрын
Thank you, Caz! Glad you enjoyed it.
@KumR4 жыл бұрын
Great one. But just one Q- How is CM measured in percentages? Like a company decides on a CM% of X ?
@TheFinanceStoryteller4 жыл бұрын
CM% = Contribution Margin $ / Revenue $. A company doesn't really "decide" on a CM%, it is the outcome of the setting of selling price which drives revenue, versus cost per unit. I think you will find the following discussion useful: margin versus markup kzbin.info/www/bejne/qHWQnWqhhJlgfJY
@pratheebhag30513 жыл бұрын
Excellent video!
@TheFinanceStoryteller3 жыл бұрын
Thank you very much!!! Please subscribe, there should be many more videos on the channel that can be useful for you.
@GolfandIndustry3 жыл бұрын
I don’t understand the difference between contribution margin and gross margin. In this video you mention revenue - variable costs = contribution margin - fixed costs = operating margin Does the fixed costs take into consideration SG&A? How does COGS differ from variable costs? Is it just the fixed costs that go into the COGS? Revenue - COGS = gross margin - sg&a = operating margin
@TheFinanceStoryteller3 жыл бұрын
Hi Ian! Yes, this is one of the confusing things in the world of finance. Companies either use the CM/OM method for the income statement, or the GM/OM one. In the CM/OM format, revenue - variable costs = contribution margin - fixed costs = operating margin. You could call this a profit and loss statement (P&L) by type of cost (variable or fixed). In the GM/OM format, Revenue - COGS = gross margin - SG&A - R&D = operating margin. You could call that a P&L by the business function that generates the cost. Simply put: inventoriable manufacturing cost goes into COGS, all the other functions (the "office or lab people") are either in SG&A or R&D. Fixed cost and SG&A are not necessarily the same thing. The biggest difference between the two is that depreciation of manufacturing buildings and machinery goes into fixed costs in the former method, and into COGS in the latter method. In other words, COGS for a company that makes products consists of (mostly) materials, labor and depreciation of manufacturing equipment. More on this in my COGS video kzbin.info/www/bejne/oHa4n3ablJ58Y9U and my video on gross profit kzbin.info/www/bejne/fpzRpqh4oNyMnck Another difference can be transportation and distribution cost of outgoing shipments from the factory to the customer. This would be a variable cost in one method, and SG&A in the other. I have even seen a company where internally they used metrics called gross margin before transportation and gross margin after transportation to make this more visible. Hope this helps!
@guillaumejeandrain68523 жыл бұрын
Great video ! Would that be applicable to a restaurant ? Lots of different products, contribution margin would vary depending on the season as the price of the ingredients are not stable, ... Should we calculate the contribution margin for each and every product ?
@TheFinanceStoryteller3 жыл бұрын
That could be an interesting exercise to do, on a meal level or the more aggregated "category" level (starters, main, drinks).
@chaitraarora68764 жыл бұрын
Nicely explained 👍😊
@TheFinanceStoryteller4 жыл бұрын
Thank you, Chaitra!
@meiqbalcpm5 жыл бұрын
Thank You! 👍
@TheFinanceStoryteller5 жыл бұрын
You're welcome, Muhammad!
@darkpurpleshadow32404 жыл бұрын
Thank you
@TheFinanceStoryteller4 жыл бұрын
You're welcome
@ebymamygorhalaetidoadf96022 жыл бұрын
Character In the video It's great, I like it a lot $$
@TheFinanceStoryteller2 жыл бұрын
thank you!
@vsevolodsyskin91074 жыл бұрын
Good job
@TheFinanceStoryteller4 жыл бұрын
Thank you!
@JayAlejandro4 жыл бұрын
very good!!
@TheFinanceStoryteller4 жыл бұрын
Thank you, Jay!
@mohamedniyas99563 жыл бұрын
But what is fixed cost why do we want to subtract from content 🤔
@mohamedniyas99563 жыл бұрын
Where is the fixed cost come in problem
@TheFinanceStoryteller3 жыл бұрын
Hi Mohamed! Not sure what your question is. In the video, I show that revenue minus variable costs equals contribution margin. Then as the next step you take contribution margin and deduct fixed cost to get to operating margin. An example of fixed cost is depreciation, or rent for a building.
@aishuu_51822 жыл бұрын
can a contribution margin will negative?
@TheFinanceStoryteller2 жыл бұрын
Yes, if variable costs are higher than revenue.
@aishuu_51822 жыл бұрын
@@TheFinanceStoryteller so what about the CMR ?
@aishuu_51822 жыл бұрын
@@TheFinanceStoryteller rest of the calculation can be calculate as normal case
@TheFinanceStoryteller2 жыл бұрын
@@aishuu_5182 What do you mean by CMR? Contribution Margin Rate? As in: CM as percentage of revenue? Yes, that could be negative as well.
@ManhNguyen-lw5bx2 жыл бұрын
the video image is too poor, you need to fix it more
@TheFinanceStoryteller2 жыл бұрын
It is fine on my end. You might have to go to settings - quality, and adjust there to higher image quality (depends on your internet bandwidth).
@fiifianyimadu61185 жыл бұрын
What margin is too high or too low? say, if contribution per unit is 15%?
@TheFinanceStoryteller5 жыл бұрын
Hello Fiifi! That is very hard to say. I think 15% would be relatively low. My main question is: how high are the fixed costs that need to be covered by the Contribution Margin? The margin that a company makes depends to a large extent on the industry it operates in, and the amount of unique value that its products or services have. Here are two suggestions for related videos to watch: Gross Margin and Operating Margin (comparing margins of 4 companies) kzbin.info/www/bejne/jHSwe619ZqaUjqM Price versus value kzbin.info/www/bejne/aIGyaqd_qZpraZI
@LinhNguyen-jb7jv3 жыл бұрын
the sound is not good I am quite disappointed
@TheFinanceStoryteller3 жыл бұрын
Thanks for the feedback. This is one of my older videos, I have since upgraded my equipment. The content is very good though, so it is worth watching the video with sound off and subtitles on.