Contribution Margin (CM) is how Setpilot represents profit at different levels of cost attribution. Instead of collapsing everything into one "profit" number, Setpilot shows you four levels (CM1 to CM4) so you can see exactly where money is being made or lost.
The four levels
Level | Formula | What it tells you |
CM1 — Gross Profit | Net Revenue − Product Costs | How much margin your products carry before any operational costs. Your pricing vs COGS story. |
CM2 — Order Profit | CM1 − Order Processing | Margin after the cost of fulfilling an order (shipping, payment fees). Your operations story. |
CM3 — Contribution Margin | CM2 − Marketing | Margin after acquisition cost. The truest number for measuring per-order profitability at scale. |
CM4 — Net Profit | CM3 − Other Costs | Bottom-line profit after fixed overheads. What you actually take home. |
When to look at each level
CM1 — when evaluating pricing, cost negotiations with suppliers, or discount depth. If CM1 is thin, no amount of marketing optimisation saves you.
CM2 — when evaluating shipping policies (free shipping thresholds, carrier rates) and payment method mix.
CM3 — when evaluating ad channels and acquisition economics. CM3 per customer is the truest LTV input.
CM4 — when evaluating the business as a whole, for monthly or quarterly reviews.
A worked example
Imagine an order worth $100 in Net Revenue:
Step | Amount | Running total |
Net Revenue | $100.00 | $100.00 |
− Product Costs (COGS) | −$35.00 | CM1: $65.00 |
− Shipping | −$8.00 |
|
− Payment fees (2.9% + $0.30) | −$3.20 | CM2: $53.80 |
− Marketing (allocated) | −$22.00 | CM3: $31.80 |
− Other (apps, salaries, etc.) | −$9.50 | CM4: $22.30 |
That is a 22.3% net profit margin on the order — healthy for a typical DTC store.
Common mistakes
Optimising only for revenue. A revenue-positive campaign can be CM3-negative if the acquisition cost is too high.
Ignoring CM1. If your product margin is structurally low, scaling marketing will only scale your losses.
Confusing ROAS with profit. ROAS is Net Revenue ÷ Ad Spend. It tells you nothing about whether an order was profitable.
Where CM is shown
CM1 through CM4 appear on the dashboard KPI tiles, in the P&L waterfall chart, on individual order rows in the Orders page, and in the Products page for per-SKU margin analysis.