Deckungsbeitrag

English translation: contribution margin

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)

German term or phrase:	Deckungsbeitrag
English translation:	contribution margin

08:43 Feb 14, 2002

German to English translations [PRO]
Bus/Financial - Accounting

German term or phrase: Deckungsbeitrag

Bei Produktkalkulation muß man auch unseren Deckungsbeitrag beachten

Vesna Kudumija (X) KudoZ activity Questions: 6 (none open) Answers: 0
Local time: 09:19

another vote for "contribution margin"

Explanation:
As Schäfer tried to explain in Sabine's reference, the "Deckungsbeitrag" is the money that's left over after all variable costs of producing and marketing a product (even in the rare case that there is only one product) have been paid. In order to be a real "contribution to profit" this leftover money (aka: product profit margin) would have to be more than that product's share of fixed costs and overhead (or all the fixed costs and overhead, if there is only one product).

Usually the term is only used when there are several products. The "contribution margins" of all the products together should hopefully pay the fixed costs and overheads with some small change left over as profit. Based on this data, decisions are made about which products should be retained, pushed, or scuttled.

I do not quite understand why all these dictionaries offer so many possibilities, but here they are if you have the patience to read them:

Schäfer: contribution margin / profit contribution / variable gross margin (or profit) / marginal balance / marginal income / direct product profit

Hamblock/Wessels – Großwörterbuch Wirtschaftsenglisch – Same as Schäfer plus: manufacturing margin / current cost returns

Zahn – Wörterbuch Bank- und Börsenwesen: nothing more

Dietl/Lorenz – Wörterbuch für Recht, Wirtschaft und Politik:
Romain – Wörterbuch der Rechts- und Wirtschaftssprache – one more: variable gross income

Reinhart von Eichborn – Der kleine Eichborn: nothing more

Arthur Andersen – Fachwörterbuch Rechnungslegung: nothing more (?? do we still quote theeeeeem ??)

Google results under English:

Domain: .com .uk

contribution margin - 3200 100
contribution to profit - 640 134
profit contribution - 3400 400
variable gross margin - 13 Zero
variable gross profit - 12 3
marginal balance - 20 5
marginal income (-tax) - 160 54 (many hits still concern tax)
direct product profit - 34 8
manufacturing margin - 200 7
current cost return(s) - Zero* 7
variable gross income - Zero 1

* "current cost return(s)" doesn't make much sense either

If one takes the three leaders and blocks off all results older than three months, we get these results for Google English:

Google results under English:

Domain: .com .uk

contribution margin - 1700 21
contribution to profit - 370 38
profit contribution - 1700 130

Here are some definitions for "contribution margin" from online glossaries:

http://www.bplans.com/g/index.cfm?a=s1&sterm=Contribution

"Contribution margin: Contribution can have different meanings in different context. When contribution is applied to a product or product line, it means the difference between total sales revenue and total variable costs, or, on a per-unit basis, the difference between unit selling and the unit variable cost and may be expressed in percentage terms (contribution margin) or dollar terms (contribution per unit). Contribution is also frequently expressed as contribution margin for a whole company or across a group or product line, in which case it can be taken as gross margin less sales and marketing expenses. For example, Marketing Plan Pro produces a table named Contribution Margin that shows sales, cost of sales, gross margin, sales and marketing expenses, and contribution margin. The contribution is gross margin less sales and marketing expenses."

http://retailindustry.about.com/library/terms/c/bld_cont_mar...

"Contribution margin: Sales revenue less variable costs. It is the amount available to pay for fixed costs and provide any profit after variable costs have been paid."

http://www.hansen.nelson.com/glossary_a_c.html

"contribution margin: Sales revenue minus total variable cost or price minus unit variable cost."

If we do the same with "Deckungsbeitrag" we get:

http://freetutorials.de/kore/koreglossar.html

"Deckungsbeitrag = Erlös - variable Kosten"

"Deckungsbeitrag: Ergebnis der Deckungsbeitragsrechnung. Der Deckungsbeitrag eines Produktes oder eines Auftrages ergibt sich als Differenz von Erlös und variablen Kosten."

http://www.isb.rpl.de/root/service/service4_a.cfm?show=d

"DECKUNGSBEITRAG: Umsatz abzüglich der variablen Kosten. Der Deckungsbeitrag stellt als rechnerische Größe den Teil des Umsatzes dar, der zur Deckung der fixen Kosten verbleibt."

As these definitions in English and German are all the same (deckend :-) ), we can go on to "profit contribution":

http://www.glencoe.com/sec/busadmin/marketing/dp/mktg_mgmt/g...

"profit contribution: A measure of the profit a certain product brings to a company."

Swell! All other definitions for "profit contribution" are similar and there are nowhere near as many real definitions for "profit contribution" as there are for "contribution margin". As you can see from the example, the definitions are also more nebulous and less bean-counting precise.

Back when Christ was a mess cook and I was trying to learn this stuff, people usually referred to "profit contribution" or "contribution to profit" but the German and English definitions above show that "contribution margin" is now the more exact accounting term.

The terms with "profit" in them may sound more positive but maybe it is now finally time to start cooling it with all the overly-positive expressions concerning corporate finance.

I would definitely go along with the many other answerers and "agreeers" who voted for "contribution margin".

HTH

Dan

Selected response from:

Dan McCrosky (X)
Local time: 09:19

Grading comment

I am impressed with the length and details, I came upon this web site by accident, looking for some on-line dictionaries and decided to propose a term for translation that I was not able to find satisfactory translation for and I think it's COOL. THANKS A LOT.
4 KudoZ points were awarded for this answer

Summary of answers provided

4 +7

contribution margin. direct product profit, marginal income, variable gross margin (or profit)

Sabine Tietge

break-even contribution / contribution margin

Alexander Schleber (X)

profit contribution, profit margin

Ralf Lemster

another vote for "contribution margin"

Dan McCrosky (X)

Answers

5 mins confidence:

peer agreement (net): +7

contribution margin. direct product profit, marginal income, variable gross margin (or profit)

Explanation:
Take your pick:

Deckungsbeitrag m
(KoR) contribution margin
(Also:)
– profit contribution
– variable gross margin (or profit)
– marginal balance
– marginal income
– direct product profit
(ie, in Grenzkostenrechnungen ermittelte Bruttogewinne oder auch Differenz von Erlös und den variablen Kosten e–s Produkts)

Sabine Tietge
Local time: 12:49
Native speaker of:

German,

English
PRO pts in category: 4

6 mins confidence:

profit contribution, profit margin

Explanation:
"Deckungsbeitrag" is the contribution of a business activity to cover ("decken") the costs involved. Although one could argue that this is not exactly the same as a profit margin, it's often used that way. (Mind you, to calculate the precise amounts, you would need to know your exact costs - how many businesses are in a position do that...?)

Ralf Lemster
Germany
Local time: 09:19
Native speaker of: German
PRO pts in category: 183

16 mins confidence:

break-even contribution / contribution margin

Explanation:
Deckung = coverage
Beitrag = contribution
It is only indirectly a contribution to profits and profit margins. The Deckungsbeirtrag is in the first instance a measure of how much is contributed to covering the production and marketing costs of a company by an individual product.

That's at least what I learned in college. Zahns translation as "contribution margin" indiretcly affirms this.

Alexander Schleber (X)
Belgium
Local time: 09:19
Native speaker of:

German,

English
PRO pts in category: 34

6 hrs confidence:

another vote for "contribution margin"

Dan McCrosky (X)
Local time: 09:19
Native speaker of:

English
PRO pts in category: 14

Grading comment

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English translation: contribution margin

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