Contribution margins are calculated by:

Contribution margins are a key financial metric that helps assess the profitability of individual items sold or the overall business model. This metric is determined by subtracting total variable expenses from total revenue.

When total variable expenses are deducted from total revenue, the result reflects how much money is available to cover fixed costs and contribute to profit. This calculation is critical for understanding how different products or services contribute to the overall profitability of a practice or company, as it highlights the earnings available after covering the costs that vary with the level of production or sales.

The other methods listed do not accurately represent the calculation of contribution margins. For instance, adding fixed costs to variable expenses does not provide insight into the profit generated from sales after accounting for only variable costs. Calculating total expenses divided by unit sales would yield an average cost per unit sold, which is distinct from understanding profitability on a contribution basis. Lastly, estimating revenue growth over time does not reflect how much of that revenue is available to cover fixed costs and generate profit, as it does not consider expenses at all. Thus, the correct approach to calculating contribution margins is by subtracting total variable expenses from total revenue.