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New Customer CM2 is the money first orders leave on the table after every per-order cost, and before any marketing. It is the pool that has to pay for acquiring those customers.

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Formula

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

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Formula Components

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How It Works

Every input is an order-level cost, calculated when the order is processed and stored with it, then summed over new customer orders. Upstack treats an order as a new customer order when it is the earliest non-cancelled order it has for that Shopify customer, so each customer contributes one order. Orders with no customer attached are in neither segment. Nothing in NC CM2 depends on ad spend or recurring expenses. Those enter at NC CM3, where Upstack subtracts your total ad spend from NC CM2.

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Example

An apparel brand acquires 2,050 new customers in a month and spends $61,000 on ads. NC CM2 is $27.40 per new customer. Ad spend is $29.76 per new customer. First orders fall $4,825 short of paying for the ads that month.

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How to Interpret It

NC CM2 versus ad spend is the first-order break-even test. When NC CM2 is below total ad spend, acquisition only pays off if those customers buy again. That’s normal for many DTC brands; what matters is how long it takes.
  • NC CM2 growing faster than NC net revenue means per-order costs are falling as a share of first orders: better carrier rates, a higher free-shipping threshold, or bigger first baskets.
  • NC CM2 flat while first orders grow means each new customer is bringing in less margin. Look at discounts in NC CM1 % and shipping in NC CM2 %.

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Common Pitfalls

  • Free shipping on first orders. In Use Shopify Shipping Charges mode, shipping cost equals what the customer paid. A free-shipping welcome offer then shows zero shipping cost and overstates NC CM2.
  • Payment fees are charged on the order total. The percentage part of a gateway fee applies to the full order amount including shipping and tax, so it can be higher than a quick estimate on product revenue.

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FAQ

Compare NC CM2 per new customer to your CAC. Above CAC, first orders are profitable after ads. Below it, the shortfall is what repeat orders need to recover. A good level is one your repeat rate can pay back within a timeframe your cash flow can carry.
No. Ad spend and marketing costs come out at NC CM3.
See all Contribution Margin metrics →