Reading your P&L Answer 1 of 36 Updated

What are CM1, CM2 and CM3?

They are three steps of profit, each after one more kind of cost. CM stands for contribution margin. CM1 is what you keep from your sales after paying for the products. CM2 is what is left after shipping and payment fees too. CM3 is what is left after marketing too. EBITDA is what is left after your fixed costs too: your profit after every cost.

An example. You sell a hoodie for €80,00 without VAT. It cost you €30,00 to buy, so CM1 is €50,00. Shipping and packing cost €6,00, and the payment fee is €2,00. So CM2 is €42,00. If ads cost you €15,00 per sale, CM3 is €27,00.

On your P&L they are lines 19, 25 and 29. Right under each one sits its percentage of net revenue. You can colour those percentages with margin targets. Insights, Products shows the same steps for each product.

Read them together to see what changed. If CM1 holds but CM2 falls, look at shipping, returns or small baskets, not at your prices. The whole ladder, with what each margin tells you, is in CM1, CM2 and CM3 explained.

Where you find it Overview · Where the money goes

app.nouz.co/overview
The margin waterfall for the month so far: Net Revenue, then CM1 after product costs, CM2 after logistics and payment fees, CM3 after marketing, and EBITDA after overhead, each drawn as a bar against net revenue.
Net revenue, then one kind of cost taken away at each step: product costs for CM1, shipping and payment fees for CM2, ad spend for CM3.

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More in Reading your P&L

All 36 questions
  1. 01 What are CM1, CM2 and CM3? You are reading this
  2. 02 What does each line of the P&L mean?
  3. 03 How do I compare two periods?
  4. 04 What do the Daily, Weekly, Monthly and Yearly views show?
  5. 05 Can I pick any date range I want?

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