THE CONTRIBUTION MARGIN AS A PRICING METRIC FOR PROFIT FOR THE COMPANY

Abstract

The present study presents the Contribution Margin, a metric for pricing products and services, as the most effective, advantageous and profitable method for the company. Therefore, the objective is to explain in a theoretical way that this methodology is the most advantageous, exposing, at the end, interviews carried out with some entrepreneurs in the city of Sertanópolis, Paraná, which contribute to the position adopted in this work. Therefore, it is necessary to explain why setting prices for the production and circulation of goods or services is indispensable and relevant for companies. Other pricing metrics, such as Mark-up and competition-based pricing, will be indicated so that, in sequence, the Contribution Margin is addressed. In the end, the interviews carried out will be presented objectively, so that they corroborate the conclusion and that the Contribution Margin is an effective and advantageous method for companies to price their products and services. The methodology used in the present research was descriptive and explanatory, from the review of existing bibliographies, in addition to the experimental one that collected the testimony of some entrepreneurs from Sertanópolis/PR. In the end, it was found that the Contribution Margin is the most beneficial metric for pricing, as it does not use fixed costs in pricing, making it competitive, in addition to providing the minimum revenue necessary to offset fixed and variable costs without causing damage to the company, in addition to being an indicator that contributes to decision making by administrators, managers and partners of a company, contributing to its success and healthy growth.