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New Customer CM4 is what first orders earn after paying for every ad dollar plus their share of retainers and overhead, based on their share of net revenue. Because it carries all ad spend, it’s a stress test for acquisition rather than a share of company profit.

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Formula

NC CM4 = NC CM3 − NC Agency Fees − NC Opex − NC Total Other Cost

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Formula Components

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How It Works

Upstack builds NC CM4 in two steps:
  1. From order data. It takes revenue and costs on new customer orders (each customer’s earliest non-cancelled order) and subtracts your total ad spend for the range.
  2. At report time. It subtracts the new customer share of every Recurring expense (Marketing, Opex, Agency Fees, Other) and every Variable cost (Marketing, Opex). The share is new customers’ portion of net revenue for the same date. See how the split works.
Recurring and variable costs are split, so NC and RC together carry them once. Ad spend is not split: RC CM4 also subtracts all of it. So NC CM4 + RC CM4 is less than CM4 by one copy of ad spend (and by the margin of any orders with no customer attached, which sit in neither segment).

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Example

A month with 1,800 new customers, $78,000 in ad spend, a $5,000 agency retainer, $22,000 of Opex recurring expenses, and a Marketing variable cost of 3% of ad spend ($2,340). That’s $29,340 of recurring and variable costs. New customers brought in 40% of net revenue, so they carry 40% of it. The store made $122,420 in operating profit. NC CM4 is only $584 because first orders carry all $78,000 of ad spend on top of their share of overhead. NC CM4 + RC CM4 is $44,420, which is $78,000 short of CM4: the ad spend counted twice.

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How to Interpret It

Use NC CM4 as a trend, not a verdict. A negative value is common for brands in growth mode. Watch whether it’s getting less negative as you scale: that means acquisition is getting more efficient relative to your fixed costs. To see what acquisition actually earns before overhead, use NC CM3. To see the business’s real operating profit, use CM4.

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Common Pitfalls

  • Don’t add NC CM4 and RC CM4. You’ll double count ad spend. Overhead is split between them, but ad spend is subtracted in full from both.
  • NC CM4 % and NC CM4 per Order skip step 2. They include total ad spend and order fees but not recurring expenses or variable costs, so they’ll look better than NC CM4 ÷ NC net revenue.
  • Short ranges. A one-day view still carries a full day of every recurring expense, split by that day’s revenue mix.

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FAQ

Because NC CM4 doesn’t include returning customer margin, but it does carry all of your ad spend. Store-wide CM4 has the returning customer margin to absorb it.
By net revenue. Each segment carries recurring and variable costs in proportion to its share of net revenue for the same date. If you want a different split, for example by order count, build a custom measure from the store-wide cost measures.
See all Contribution Margin metrics →