How do you calculate order profitability?

Multiply contribution margin per shipped unit by order quantity to get gross contribution, then multiply by expected shippable yield and collectable order scope. With $18.50/unit, 950 units, 97% yield and 100% scope you get a gross of $17,575 and an expected order contribution of $17,047.75.

What is contribution margin versus gross order contribution?

Contribution margin is per unit ($18.50 here) and represents price minus variable cost on one piece. Gross order contribution is that figure times the whole order quantity ($17,575) before any yield or commercial risk is applied.

Why does yield reduce the order's value?

Because units you scrap still consume material and machine time but ship nothing. At 97% yield you lose 3% of contribution, which is $527.25 on this order even though the customer never sees the scrapped pieces.

What is collectable order scope?

It's the share of the order that is commercially firm and likely to be invoiced and paid, accounting for cancellable quantities, payment risk, or unconfirmed releases. At 100% there is no commercial haircut, so contribution at risk from commercial uncertainty is $0.

Is this a good order to take?

At $17,047.75 expected contribution against only a 3% yield risk and no commercial risk, it's a clean order. The decision still depends on whether the machine time it consumes could earn more contribution on another job.

Should I include fixed overhead in this number?

No. This is a contribution figure by design. It tells you the cash the order adds toward covering fixed costs and profit, which is the correct basis for marginal accept/reject and capacity-fill calls.

Contract Manufacturing, Job Shop Quoting & Make-to-Order calculator

Order Profitability Calculator

Order Profitability tells a job shop or make-to-order plant what a specific purchase order is actually worth after scrap and commercial risk are stripped out, not just the headline line value. Estimators, plant managers and owners use it before accepting a contract or sequencing it on the floor, because a fat-looking order can quietly bleed margin once you account for the units you'll scrap and the revenue you may never collect. It separates the gross contribution you'd earn in a perfect world from the contribution genuinely expected, so you can compare jobs on a like-for-like basis. The metric is contribution-based on purpose: it ignores fixed overhead and focuses on the cash each unit adds, which is the right lens for deciding whether to take marginal work that fills idle capacity.

What this calculator does

Estimate expected contribution dollars for a make-to-order customer order.
deciding whether a customer order is attractive enough to accept or prioritize
It computes the expected dollar contribution of a single customer order after derating gross contribution for first-pass yield loss and the commercially firm (collectable) portion of the order.

Formula used

gross order contribution before risk = contribution margin per shipped unit × customer order quantity
expected order contribution = gross order contribution before risk × expected shippable yield × collectable order scope

Inputs explained

Contribution margin per shipped unit:
Customer order quantity:
Expected shippable yield (first-pass acceptance):
Collectable order scope (commercially firm portion):

How to use the result

Use it during quote acceptance, order prioritization, and capacity-fill decisions when you need to rank jobs by real risk-adjusted cash contribution rather than raw revenue.
It treats yield and collectable scope as independent flat percentages and assumes contribution margin per unit is constant across the run, so it won't capture learning-curve effects, tiered scrap, or step-changes in material cost on large orders.

Current U.S. benchmarks

The U.S. prime lending rate is 6.75% (Federal Reserve via FRED, 2026-07-02). Payback and financing math should start from today's rate, not a remembered one.

Common questions

How do you calculate order profitability? Multiply contribution margin per shipped unit by order quantity to get gross contribution, then multiply by expected shippable yield and collectable order scope. With $18.50/unit, 950 units, 97% yield and 100% scope you get a gross of $17,575 and an expected order contribution of $17,047.75.
What is contribution margin versus gross order contribution? Contribution margin is per unit ($18.50 here) and represents price minus variable cost on one piece. Gross order contribution is that figure times the whole order quantity ($17,575) before any yield or commercial risk is applied.
Why does yield reduce the order's value? Because units you scrap still consume material and machine time but ship nothing. At 97% yield you lose 3% of contribution, which is $527.25 on this order even though the customer never sees the scrapped pieces.
What is collectable order scope? It's the share of the order that is commercially firm and likely to be invoiced and paid, accounting for cancellable quantities, payment risk, or unconfirmed releases. At 100% there is no commercial haircut, so contribution at risk from commercial uncertainty is $0.
Is this a good order to take? At $17,047.75 expected contribution against only a 3% yield risk and no commercial risk, it's a clean order. The decision still depends on whether the machine time it consumes could earn more contribution on another job.

Last reviewed 2026-05-12.