[pbreit]

"So, positive contribution margin should imply they covered all the fixed and variable costs, the way I read it."

That's not what the passage you included says. It says it only covers variable costs.

[goodJobWalrus]

Passage no, but TC report says they were contribution margin "positive", which, they way I understood it, implies it should cover fixed costs, otherwise it is still contribution margin-negative (vis-a-vis fixed costs)

So, the passage explains what contribution margin is, but TC is talking about being "contribution margin positive". How would you understand the second term?

[dsp1234]

As I mentioned in an example above, just because you have covered all of your variable costs doesn't necessarily mean that you have the ability to cover all of your fixed costs at a reasonable sales rate. Contribution Margin Positive just means that each widget sold contributes towards fixed costs (as compared to negative, where each widget sold reduces the amount of money available to pay fixed costs), even if that contribution is one cent. So you could be positive by selling a product for $10 that has a variable cost of $9.99, but damn if you'll ever make a profit (where contribution margin * widgets sold > fixed costs).

[mbesto]

> So, the passage explains what contribution margin is, but TC is talking about being "contribution margin positive".

TC has a terrible reputation for using business terms that aren't really generally considered business terms.

[refurb]

The reason it's called contribution margin is because it contributes to the other costs of the company.

I've only ever heard contribution used in the sense of COGS, not foxed costs.

[pbreit]

Negative contribution margin would be if your sales did not even cover your variable costs.