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Contribution Margin Calculator for E-commerce (CM1, CM2, CM3)
Contribution margin is what an order leaves behind after every cost that grows with sales. It is the most honest number in e-commerce: it tells you whether selling more makes you richer or just busier. Most operators split it into three levels.
The formula
Contribution margin = revenue − variable costs (product, fulfillment, fees, marketing)
How to use this calculator
- Enter the order value excluding VAT.
- Add product cost, then shipping and fulfillment, then payment fees.
- Add your marketing cost per order (CAC) to see CM3, the margin that pays for fixed costs and profit.
Want the full picture? Read the guide: Contribution Margin for E-commerce: Formula, Examples and Benchmarks.
Frequently asked questions
What is a good contribution margin for e-commerce?
Before marketing (CM2), healthy DTC brands typically sit at 40–60%. After marketing (CM3), 15–30% is solid. A negative CM3 on first orders can work only if customers reliably buy again.
What is the difference between gross margin and contribution margin?
Gross margin only subtracts product cost. Contribution margin also subtracts shipping, fees, returns and usually marketing, so it shows the real economics of each order.
What are CM1, CM2 and CM3?
CM1 is revenue minus product cost. CM2 also subtracts fulfillment, shipping and payment fees. CM3 also subtracts marketing. Each level answers a different question about where margin leaks.
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