CM1

CM1 is revenue minus the direct variable costs tied to producing and delivering a sale — typically the first layer of profitability below gross revenue.

There is no single, universally standardized CM1 formula. What counts as a "direct variable cost" at CM1 depends entirely on how a company's finance team structures its P&L — one company might include payment processing fees and shipping in CM1, another might push those down to CM2. Two companies both reporting a "CM1 of 35%" may not be measuring the same thing, and neither is necessarily wrong; they've just drawn the line differently.

This is why CM1/CM2 numbers should never be compared across companies without first checking exactly which costs are included at each level. Within one company, though, CM1 is genuinely useful as a consistent, apples-to-apples measure of whether unit economics are improving over time.