Glossary · Ecommerce metrics
Ecommerce KPIs: the metrics that matter, with formulas and examples
This glossary covers the ecommerce KPIs you actually need when you pay for traffic: 26 metrics, from revenue to first-order profit. Each one comes with a definition, a formula and an example using the same store, so you can see how the numbers fit together.
The 6 numbers to check every week
You don't need twenty indicators every Monday. Six will do; open the others when one of these moves.
- Revenue, before sales tax and net of returns.
- Margin, before and after marketing.
- MER, the check on all your marketing.
- nCAC, what new customers cost you.
- Average order value, the fastest lever on margin.
- Platform ROAS, to compare campaigns and creative.
The example store, one month before sales tax: 40,000 sessions, 800 orders, $44,000 revenue, $15,400 cost of goods, $5,600 fulfillment and fees, $11,000 marketing, $8,000 fixed costs, 500 new customers out of 700.
Sales and customers
Revenue
Total sales in a period. For margin math, use revenue before sales tax and net of returns and discounts.
Formula: orders × average order value
Example: 800 orders × $55 = $44,000.
Average order value (AOV)
What a customer spends per order on average. Bundles, free-shipping thresholds and cross-sells lift it.
Formula: revenue ÷ number of orders
Example: $44,000 ÷ 800 orders = $55.
First order value (FOV)
The average value of new customers' first orders. It's the first cash you use to pay back what it cost to get them.
Formula: first-order revenue ÷ number of first orders
Example: 500 first orders worth $26,000 give an FOV of $52.
Conversion rate (CR)
How many visits out of a hundred become an order. It's the cost-per-purchase lever you control most.
Formula: orders ÷ sessions × 100
Example: 800 orders ÷ 40,000 sessions = 2%.
Repeat purchase rate
The share of customers who buy again in a period. The higher it is, the more you can spend to win the first order.
Formula: customers with two or more orders ÷ total customers × 100
Example: 210 of 700 customers bought again: 30%.
Margins and break-even
Gross margin
What's left of revenue after the cost of the products you sold.
Formula: revenue − cost of goods sold
Example: $44,000 − $15,400 = $28,600, or 65% of revenue.
Contribution margin
What's left after every cost that grows with sales: product, shipping, packaging, payment fees and marketing. Some people quote it before marketing, some after: always say which one you use.
Formula: gross margin − variable costs
Example: $28,600 − $5,600 in fulfillment and fees = $23,000 before marketing (52%); minus $11,000 of marketing = $12,000.
Operating margin
Contribution margin minus fixed costs: salaries, rent, software, services. It tells you whether the business itself makes money.
Formula: contribution margin after marketing − fixed costs
Example: $12,000 − $8,000 = $4,000.
Net margin
What you actually keep, after taxes and interest.
Formula: operating margin − taxes − interest
Break-even point (BEP)
The revenue at which sales cover every cost, fixed and variable: below it you lose money, above it you earn.
Formula: fixed costs ÷ contribution margin %
Example: $8,000 ÷ 27.3% (12,000 of 44,000) = about $29,300 of monthly revenue.
Advertising
CPM
Cost per thousand impressions. Mostly set by the market: auctions, seasons, competition.
Formula: spend ÷ impressions × 1,000
Example: $400 for 50,000 impressions = $8.
CTR
How many people out of a hundred click after seeing the ad. On Meta, use link CTR, not CTR (all).
Formula: clicks ÷ impressions × 100
Example: 750 clicks ÷ 50,000 impressions = 1.5%.
CPC
What each click costs. At the same CPM, a higher CTR brings it down.
Formula: spend ÷ clicks, or CPM ÷ (1,000 × CTR)
Example: $400 ÷ 750 clicks = $0.53.
CPL
Cost per lead: a newsletter sign-up, a waitlist entry, a quote request.
Formula: spend ÷ leads
Example: $300 for 120 sign-ups = $2.50.
CPA (cost per purchase)
What each order attributed to your campaigns costs in ads.
Formula: spend ÷ purchases, or CPC ÷ conversion rate
Example: $400 ÷ 15 purchases = $26.67.
ROAS
Attributed revenue per dollar of ad spend. Good for comparing ads and campaigns, not for setting your total budget.
Formula: attributed revenue ÷ ad spend
Example: 15 orders × $55 = $825 ÷ $400 = 2.06.
Try the break-even ROAS calculator →
Break-even ROAS
The ROAS below which every order loses money. It depends only on your margin before ads.
Formula: order value ÷ profit per order before ads
Example: with a 52% margin, 1 ÷ 0.52 = 1.92.
Try the break-even ROAS calculator →
Break-even CPA
The most you can spend in ads per order without losing money: it equals the order's margin before ads.
Formula: price − variable costs per order
Example: $55 × 52% = $28.60.
Try the break-even ROAS calculator →
Efficiency and customer value
CAC
Customer acquisition cost: total marketing spend divided by the customers you acquired. Counting every customer, repeat buyers included, gives you blended CAC.
Formula: marketing spend ÷ customers
Example: $11,000 ÷ 700 customers = $15.71.
nCAC
CAC for new customers only. It's the most honest number for what growth costs you.
Formula: marketing spend ÷ new customers
Example: $11,000 ÷ 500 new customers = $22.
MER
Marketing efficiency ratio: total revenue divided by total marketing spend. No platform can inflate it.
Formula: total revenue ÷ total marketing spend
Example: $44,000 ÷ $11,000 = 4.
Break-even MER and target MER
The minimum MER to end the month without a loss, fixed costs included, and the MER you need for the profit you want.
Formula: (marketing + fixed costs) ÷ (margin × marketing); add your profit goal for the target
Example: (11,000 + 8,000) ÷ (0.52 × 11,000) = 3.32.
LTV (customer lifetime value)
How much margin a customer leaves you over their whole life as a customer. Better calculated on margin than on revenue.
Formula: average order value × orders in the period × margin
Example: $55 × 2.4 orders over two years × 52% = $68.64.
LTV:CAC ratio
How many times a customer's value pays back what it cost to acquire them. Many use 3 to 1 as a reference, but how fast you get paid back matters too.
Formula: LTV ÷ nCAC
Example: $68.64 ÷ $22 = 3.1.
First-order profit (FOP)
What you make, or lose, on a new customer's first purchase after paying for them in ads. If it's negative, you need repeat orders to break even.
Formula: first-order margin before ads − cost to acquire
Example: $52 × 52% = $27.04 − $22 nCAC = $5.04.
Payback period
How long it takes for a customer's margin to pay back what you spent to acquire them.
Formula: nCAC ÷ average monthly margin per customer
Example: with a positive first-order profit, payback is immediate.
How ecommerce metrics connect
Ad metrics are a chain: each one is calculated from the one before. Here's a campaign from the example store, from CPM to first-order profit:
| Step | Value | Where it comes from |
|---|---|---|
| CPM | $8.00 | cost of 1,000 impressions |
| CTR | 1.5% | 15 clicks per 1,000 impressions |
| CPC | $0.53 | $8 ÷ 15 clicks |
| Conversion rate | 2% | 0.3 orders per 1,000 impressions |
| CPA | $26.67 | $8 ÷ 0.3 orders |
| Order value | $55.00 | store data |
| ROAS | 2.06 | $55 ÷ $26.67 |
| Margin per order before ads | $28.60 | $55 × 52% |
| First-order profit | $1.93 | $28.60 − $26.67 |
If first-order profit is positive, every new customer pays back their ads right away. If it's negative, the math only works with repeat orders, which is why LTV and repeat rate matter as much as ROAS. Run it with your numbers in the CAC calculator and the break-even ROAS calculator.
To apply these metrics to your store, start with the 6 numbers to check before you scale ads, or get in touch: it's what I do as an ecommerce consultant.
FAQ
Ecommerce KPIs: frequently asked questions
What are the most important ecommerce KPIs?
Six are worth checking every week: revenue, margin, MER, new-customer CAC (nCAC), average order value and platform ROAS. The rest matter when one of those six moves.
What's the difference between a KPI and a metric?
A metric is any number you measure. A KPI is a metric you picked because it drives decisions: when it changes, you do something different.
How often should I review ecommerce KPIs?
Sales, MER and cost per purchase every week; margins, break-even and LTV every month, once all costs are in.
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