Gross margin per acre — revenue minus variable costs, per acre — is the standard way to rank enterprises. It tells you which crop earns most on each acre before fixed costs.
The example
$765 revenue, $520 variable cost.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 765 − 520 | — |
| 3 | Gross margin | → $245/ac |
The formula
The formula:
How it works
How it works:
- Revenue per acre = yield × price (+ any government payments).
- Subtract variable costs per acre — seed, fertilizer, chemicals, fuel, drying.
- The result is gross margin per acre — the contribution before fixed/overhead costs.
- Rank enterprises (corn vs beans vs wheat) by gross margin to allocate acres.
Gross margin, not yield or price, ranks enterprises. A high-yielding crop with high input costs can lose to a modest crop with cheap inputs. Comparing gross margin per acre across enterprises — on the same land — is how you decide the rotation and acre mix. Keep fixed costs out of this number; they do not change with which crop you plant.
Try it: interactive demo
Revenue and variable cost per acre.
Variations
Total field margin
Per acre × acres:
Margin ratio
Margin ÷ revenue:
Net after fixed costs
Subtract overhead:
Pitfalls & errors
Variable only. Gross margin subtracts variable costs, not fixed/overhead.
Per-acre basis. Compare enterprises on the same per-acre footing.
Include payments. Add government/insurance payments to revenue if relevant.
Practice workbook
Frequently asked questions
How do I calculate gross margin per acre in Excel?
What's the difference from net profit?
Why rank enterprises by gross margin?
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