CM1, CM2, and CM3 are profit levels. Each level subtracts more costs, so you can see where profit is created or lost.
CM1
CM1 = Revenue - Product Costs
It shows how much margin is left after the cost of the products you sold.
Use CM1 to understand if products are priced well before shipping, payment fees, and marketing costs.
CM2
CM2 = CM1 - Shipping Fees - Payment Fees
This usually includes shipping, fulfillment, packaging, payment fees, and similar order costs.
Use CM2 to understand how much margin is left after the order has been fulfilled.
CM3
CM3 = CM2 - Marketing Costs
This shows the profit left after product costs, order costs, and ad spend.
Use CM3 to understand if your acquisition is profitable.
Simple example
A customer places a $100.00 order.
The products cost $35.00. CM1 is $65.00.
Shipping, fulfillment, and payment fees cost $15.00. CM2 is $50.00.
Marketing costs for the order are $20.00. CM3 is $30.00.
How to read it
CM1 tells you if the product margin is healthy.
CM2 tells you if the order is profitable before marketing.
CM3 tells you if the order is profitable after marketing.
Why this matters
Revenue alone does not show profit.
CM1, CM2, and CM3 help you see which costs are reducing margin.
This makes it easier to compare products, campaigns, channels, and cohorts.