Contribution Margin 1 (CM1) Calculator
Calculate Contribution Margin 1, revenue minus COGS, per order or per unit. The first tier of D2C profitability.
About this tool
CM1 = revenue − COGS. Per-order gross margin before any variable shipping or marketing cost. The starting point of every D2C unit economics deck.
Frequently asked questions
What is CM1 in D2C unit economics? +
CM1 (Contribution Margin 1) is revenue minus cost of goods sold (COGS) per order, your gross margin. It's the first and largest layer in the D2C contribution-margin stack, but doesn't include shipping, packaging, payment processing or marketing. CM1 of 60-75% is typical for apparel and beauty; 25-50% for food and beverage; 20-40% for consumer electronics.
How is CM1 different from gross profit? +
Conceptually identical, both are revenue minus direct product cost. "CM1" is the term D2C operators use because it sets up the rest of the stack (CM2, CM3, CM4). "Gross profit" is the accounting term used in financial statements. Same number, different vocabulary.
What should I include in COGS for CM1? +
Product cost (manufacturing or wholesale price), inbound freight to your warehouse, import duties, and direct production labour if you make in-house. Don't include outbound shipping, payment processing, marketing or overhead, those belong in CM2 and CM3.
Is CM1 the same across all my SKUs? +
No, CM1 varies significantly by SKU because COGS varies. A high-AOV bundle often has better absolute CM1 dollars but a similar or worse CM1 percent. Run the calculator per-SKU to find which products carry your gross margin and which dilute it.
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