Contribution margin for a Shopify store, from reports you already have
Contribution margin for a Shopify store is Net Sales minus the costs that rise with each order, taken in three layers: product cost, then fulfilment and payment fees, then ads. Every input is in reports you already have, and a cost you do not have yet is named as missing rather than counted as zero.
The three layers
- CM1, after product cost: Net Sales minus cost of goods sold. What Net Sales includes and leaves out is on gross vs net sales.
- CM2, after getting the order out: CM1 minus fulfilment (labels, packaging, pick and pack) and payment fees.
- CM3, after marketing: CM2 minus ad spend for the same days.
Where each input lives
- Net Sales: Shopify's sales reports, for the period.
- Cost of goods sold: cost per item, which Shopify describes as how much the product or variant costs you. Shopify records it at the time of sale, and shows sales without a cost in a field called Net sales without cost recorded.
- Shipping labels: the Shipping section of your Shopify bill, for labels bought in Shopify. Labels bought elsewhere are on that carrier's or app's invoice.
- Payment fees: in your payout details for Shopify Payments, and in each other processor's own statements. Where each fee sits is on where to find your Shopify fees.
- Ad spend: our reasoning: in each ad platform's own reports, not in Shopify. Use spend for the same days as the sales.
Sources: Shopify Help Center: Cost per item · Shopify Help Center: Profit reports · Shopify Help Center: Types of charges on your bill · Shopify Help Center: Viewing your payout fees
A worked example (SAMPLE NUMBERS)
| Line | Amount |
|---|---|
| Net Sales | $150,000 |
| Cost of goods sold | -$57,000 |
| CM1 | $93,000 |
| Fulfilment | -$14,500 |
| Payment fees | -$4,650 |
| CM2 | $73,850 |
| Ad spend | -$31,000 |
| CM3 | $42,850 |
SAMPLE NUMBERS, not a store's figures. CM3 is about 28.6 cents of every Net Sales dollar.
When a cost is missing, say so
Our reasoning: if some products have no cost per item, work out CM1 on the sales that do have one and state how much of Net Sales that covers. If fulfilment or ad spend is missing for the period, stop at the last layer you can fill and name the one you cannot. A margin with a named gap can be acted on; a margin with a silent zero in it cannot. How a missing cost changes Shopify's own profit report is on profit reports missing costs.
CM per order, and why the average hides the losers
Divide each layer by the period's orders and you get an average contribution per order. Our reasoning: the average is the sum of orders that make money and orders that lose it, so a healthy average can sit on top of a product, a discount or a shipping zone that loses money on every order. Work out CM2 order by order from an orders export joined to cost per item, labels and fees, and sort by it.
What contribution margin cannot tell you
- Whether the store is profitable: rent, salaries, software and other fixed costs come after CM3.
- Whether the ads caused the sales: CM3 takes off spend, it does not say which orders the spend brought in.
- Cash: margin is earned when the sale is booked; the money arrives with the payout.
How estimated and traced numbers differ is on margin reports vs profit dashboards, and how ProfitRoot builds each figure is on the methodology. To see the layers on a sample store, open the demo.
Common questions
What are CM1, CM2 and CM3?
Three layers of contribution margin. CM1 is Net Sales minus cost of goods sold. CM2 also takes off the costs of getting each order out: fulfilment, shipping labels and payment fees. CM3 also takes off marketing, usually ad spend. The names are a convention, not a Shopify field.
Where do I find cost of goods sold in Shopify?
From cost per item on each product or variant, which Shopify describes as how much the product or variant costs you. Shopify records cost at the time of sale, so a cost added today does not fill in earlier orders, and sales with no cost show in Net sales without cost recorded.
What if some products have no cost entered?
Work out CM1 on the costed sales only and say how much of Net Sales that covers. Our reasoning: a missing cost counted as zero makes margin look better than it is, and nobody can see that it happened.
How do I get contribution margin per order?
Divide each layer by the orders in the same period for an average, or work it out order by order from an orders export joined to costs. The order-by-order view is the one that shows which orders lose money; an average can hide them.
Is contribution margin the same as profit?
No. Contribution margin stops before the costs that do not move with orders, such as rent, salaries and software. A store can have a healthy CM3 and still lose money once those are paid.
What this does not tell you
Which costs belong in cost of goods sold (freight in, duties, packaging) is an accounting choice your accountant owns. Put each cost in one layer and keep it there, so one month compares with the next.
The layer split and the method on this page are our reasoning, not Shopify statements. The worked example uses SAMPLE NUMBERS, not a store's figures.
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Sources last checked 2026-11-13.