CM2 (After Fulfillment): Profit After Variable Costs

CM2 (After Fulfillment) measures your profit after deducting all variable costs—COGS, fulfillment, and transaction costs—from net revenue.

Formula

CM2 = CM1 − Shipping Cost − Handling Cost − Other Fulfillment − Gateway Cost − Other Transaction

Formula Components

Metric	Definition
CM1 (Gross Margin)	Net revenue minus COGS
Shipping Cost	Cost to ship orders to customers
Handling Cost	Per-order handling and packaging costs
Other Fulfillment Cost	Additional fulfillment expenses
Gateway Cost	Payment processing fees
Other Transaction Cost	Additional transaction-related costs

Example

Your Shopify store has $75,000 CM1, with $8,000 in fulfillment costs and $4,500 in transaction costs.

When to Use

Scenario	Action
Optimizing fulfillment costs	Compare CM2 across shipping methods to reduce variable costs
Evaluating payment processors	Measure gateway cost impact on CM2
Setting break-even targets	Know your CM2 before planning marketing spend
Analyzing order profitability	Understand true margin per order before acquisition costs

Metric	Relationship
CM1 (Gross Margin)	Input margin before fulfillment deductions
CM2 %	CM2 as a percentage of net revenue
CM3 (Contribution Margin)	CM2 minus marketing costs
Total Fulfillment Cost	Combined fulfillment costs

Metric

Relationship

Input margin before fulfillment deductions

CM2 as a percentage of net revenue

CM2 minus marketing costs

Combined fulfillment costs

Formula