> ## Documentation Index
> Fetch the complete documentation index at: https://docs.upstackdata.com/llms.txt
> Use this file to discover all available pages before exploring further.

# CM1 (Gross Margin): Profit After Product Costs

> Track CM1 Gross Margin for your Shopify store. Calculate profit after COGS to understand true product profitability.

<Tip>
  CM1 (Gross Margin) measures your profit after deducting all product costs (COGS) from net revenue—the foundation for understanding true product profitability.
</Tip>

## Formula

<Info>
  **CM1 (Gross Margin)** = **Net Revenue** − **COGS** − **Other COGS**
</Info>

### Formula Components

| Metric                                                           | Definition                                   |
| ---------------------------------------------------------------- | -------------------------------------------- |
| [**Net Revenue**](/reference/metrics/orders/revenue/net-revenue) | Gross revenue minus discounts and refunds    |
| [**COGS**](/reference/metrics/orders/cogs/cogs)                  | Cost of goods sold from Shopify product data |
| [**Other COGS**](/reference/metrics/orders/cogs/other-cogs)      | Additional user-defined COGS entries         |

| Metadata        |                                                                      |
| --------------- | -------------------------------------------------------------------- |
| **Type**        | Currency                                                             |
| **Data Source** | [Shopify](/sources/shopify), [Upstack Costs](/sources/upstack-costs) |
| **Aggregation** | Sum                                                                  |

***

## Example

Your Shopify store generated **\$125,000** in net revenue last month with **\$45,000** in COGS and **\$5,000** in other COGS entries.

| Component   | Amount       | Calculation                    |
| ----------- | ------------ | ------------------------------ |
| Net Revenue | \$125,000    | Starting point                 |
| COGS        | \$45,000     | Product costs from Shopify     |
| Other COGS  | \$5,000      | User-defined costs             |
| **CM1**     | **\$75,000** | \$125,000 − \$45,000 − \$5,000 |

***

## How It Works

CM1 represents your gross margin—what remains after paying for the products themselves. It's calculated using COGS pulled automatically from your Shopify product data, plus any additional COGS you've configured in Cost Settings. This is the first level of profitability and the foundation for calculating higher contribution margin levels.

***

## When to Use

| Scenario                         | Action                                                                  |
| -------------------------------- | ----------------------------------------------------------------------- |
| Evaluating product profitability | Compare CM1 across product lines to identify your most profitable items |
| Setting pricing strategy         | Ensure CM1 covers variable costs before expanding                       |
| Comparing suppliers              | Measure impact of different COGS on margin                              |
| Benchmarking gross margin        | Track CM1% to monitor product cost efficiency over time                 |

***

## Related Metrics

| Metric                                                                       | Relationship                                |
| ---------------------------------------------------------------------------- | ------------------------------------------- |
| [CM1 %](/reference/metrics/orders/contribution-margin/cm1-percent)           | CM1 as a percentage of net revenue          |
| [CM2 (After Fulfillment)](/reference/metrics/orders/contribution-margin/cm2) | CM1 minus fulfillment and transaction costs |
| [COGS](/reference/metrics/orders/cogs/cogs)                                  | Product costs that reduce CM1               |
| [Net Revenue](/reference/metrics/orders/revenue/net-revenue)                 | Revenue base for CM1 calculation            |

[See all Contribution Margin metrics →](/reference/metrics/orders/contribution-margin)