Total revenue
Total revenue is the when you multiply the output with the selling price. It tells you how much money you will get in.
Unit contribution
It’s the profit you make for each unit that you sell (before subtracting the fixed cost). To count this out you have to take the selling price and subtract it with the variable cost.
Total contribution
This is the profit you make for selling all of your units before you subtract the fixed cost. To count out the total contribution you have to take the variable cost and multiply it with the output.
Break-even
The break even point is when something starts to be profitable. It’s when you got all your money back that you invested. You can count out when the break even by taking the fixed cost and divide it by the unit contribution (see in the beginning of this post).
Profit
The profit is what you earn, the money you get extra from your business. The opposite of “profit” is “loss”.
There are two ways of counting out the profit. The first one is total contribution (variable cost x output) – fixed cost. The other one is total revenue (output x selling price) – total cost (variable cost x output + fixed cost). I prefer the first one because for me it’s easier.
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