Contribution still needs to cover rent, management, software, and other fixed costs before there is net profit.
Try this with your own numbersFormula and worked example
Contribution = price − materials − hours × labour cost − other variable cost
| Input | Example |
|---|---|
| Revenue per engagement | 800 |
| Materials or purchased services | 250 |
| Delivery labour hours | 5 |
| Burdened hourly labour cost | 35 |
| Other variable cost | 50 |
| Calculated result | 325 |
Choose reliable inputs
Include software licences, delivery time, revisions and ongoing support when costing a project. For this cybersecurity consulting calculation, use project time logs, licence invoices and retainer scopes and a consistent definition of one engagement.
- Assessment hours: include the portion belonging to this engagement or reporting period, and record where the value came from.
- Tooling: include the portion belonging to this engagement or reporting period, and record where the value came from.
- Reporting: include the portion belonging to this engagement or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
Is contribution the same as net profit?
Contribution still needs to cover rent, management, software, and other fixed costs before there is net profit.
Include variable costs only here; fixed overhead is not deducted.
What if this input changes?
If revenue per engagement rises by 10%, this example changes by 80 . This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.