Contribution Margin 3 (CM3) Calculator
Calculate Contribution Margin 3, CM2 minus marketing/CAC. The true per-order profit after acquiring the customer.
About this tool
CM3 = CM2 − acquisition cost. Most D2C brands have positive CM2 but negative CM3 on first order, the case for repeat purchase economics.
Frequently asked questions
What is CM3 in D2C unit economics? +
CM3 (Contribution Margin 3) is CM2 minus customer acquisition cost (CAC). It tells you whether the first order alone is profitable. For most D2C brands, CM3 is negative on the first transaction, recovered via repeat purchase. Subscription brands often have positive CM3 by month 2-3.
Why is negative CM3 not always bad? +
If your customer's lifetime value exceeds CAC within your payback window (usually 6-12 months), negative first-order CM3 is the cost of investing in lifetime relationships. Negative CM3 with weak repeat purchase or long payback IS bad, that's where DTC brands burn cash without building.
What CAC should I use in CM3, paid or fully-loaded? +
Run both. Paid CAC tells you ad-economics on first order; fully-loaded CAC (including marketing salaries, tools, creative production) tells you what the business actually pays. Investors will ask for fully-loaded. Use our Fully-Loaded CAC Calculator for the honest number.
How does CM3 differ from CM4? +
CM3 stops at CAC. CM4 additionally subtracts retention costs, loyalty rewards, email/SMS platform fees, post-purchase support time. CM4 is the most defensible per-order economics and the number that survives scrutiny in investor due diligence.
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