Video

Contribution Margin - CM1, CM2, CM3 | Startup

Sarthak Ahuja · youtube.com Free Beginner India

Contribution Margin - CM1, CM2, CM3 | Startup

An Indian CA breaking down the exact CM1/CM2/CM3 framing that Indian founders and investors use in board meetings and Shark Tank pitches. Short, rupee-native, and the fastest way to internalise the three-layer stack the rest of this category assumes you know.

  • CM1 strips out COGS and direct selling costs; CM2 adds fulfilment/logistics and direct marketing; CM3 nets out the rest of marketing.
  • Indian startups report profitability in these layers, not just gross margin.
  • CM2 is often the most decision-useful layer for D2C because it captures ad spend.
Watch on YouTube ↗

It answers 2 questions

  1. What is contribution margin for a D2C brand, and what do CM1, CM2 and CM3 mean?
  2. What does a healthy CM1 / CM2 / CM3 actually look like for an Indian D2C brand?

Read with it

  1. A reference list broader than just CM1/CM2, useful once you've got the basics down and want to know what an actual CFO would... CFO Matrix Article D2C Unit Economics: 16 Metrics Every E-commerce Startup Should Know CFO Matrix
  2. Ties unit economics directly to Indian D2C cost structures, COD/RTO rates, marketplace commissions, gateway fees, rather than a... RizeVault (Razorpay) Article Mastering Unit Economics and Pricing for D2C Success Razorpay Rize
  3. The cleanest plain-English starting point from the platform most Indian D2C brands actually run on. It nails the core idea -... shopify.com Article What Is Contribution Margin? Definition and Guide Shopify
  4. The best worked-example explainer for actually doing the math: Net Sales minus product cost, shipping, payment fees, fulfilment... storehero.ai Article Contribution Margin Formula for Ecommerce (With Real Examples) StoreHero
  5. Goes one level deeper than a formula: it rebuilds the contribution-margin income statement for a real D2C P&L, so you can... polaranalytics.com Article Contribution Margin Ratio, Per Unit & Income Statement: The Complete DTC Breakdown Polar Analytics
eChai Partner Brands The partnership →