Profit
What is left of revenue after the cost of goods, ad spend and expenses.
Formula Profit = revenue − cost of goods − ad spend − expenses
Metrics explained
Every figure Sharpsum shows, what it means and how it is worked out. Each has one definition, the same on every page.
Revenue
Sales after discounts and sales reversals, plus shipping charges, without taxes.
Formula Revenue = gross sales − discounts − sales reversals + shipping charges
Cost of goods
What the products you sold cost you, from each product's cost per item in Shopify.
Ad spend
What you spent on ads, on the day it was spent.
Expenses
Shipping, handling and payment fees, plus the costs you entered, such as rent, salaries and apps.
Formula Expenses = shipping cost + handling + payment fees + other expenses
Margin
The share of revenue that is left as profit. A day with costs but no revenue reads −100%: everything spent that day is lost.
Formula Margin = profit / revenue
Orders
Orders placed, not counting test orders and orders that only sell gift cards.
Contribution margin
What orders leave after the costs that come with them, before the expenses you enter. It pays for those expenses; what is left is profit.
Formula Contribution margin = revenue − cost of goods − ad spend − shipping cost − handling − payment fees
Average order value
What a customer spends on an order on average, as Shopify's reports count it: gross sales after discounts, before sales reversals, shipping and taxes.
Formula Average order value = (gross sales − discounts) / orders
Profit per order
What an order leaves you on average after every cost, ad spend and expenses included.
Formula Profit per order = profit / orders
Ad spend per order
What your ads cost for each order on average, every platform and channel together.
Formula Ad spend per order = ad spend / orders
MER
Marketing efficiency ratio: the revenue each unit of ad spend brings, all orders and every platform together. An account's ROAS counts only the purchases its platform attributes to it.
Formula MER = revenue / ad spend
New customers
Customers who placed their first order in the period, as Shopify's reports count them. Orders placed without a customer, such as some point of sale orders, are left out.
CAC
Customer acquisition cost: the ad spend for each new customer, every platform and channel together. Returning customers are left out, so it reads higher than ad spend per order.
Formula CAC = ad spend / new customers
Repeat customers
Of the customers who placed their first order in the period, the share who have ordered again since, as Shopify's reports count customers. It grows as they come back.
Formula Repeat customers = new customers who ordered again / new customers
Orders per customer
How many orders the customers who placed their first order in the period have placed so far, on average, their first included.
Formula Orders per customer = their orders so far / new customers
LTV
Customer lifetime value: what the customers who placed their first order in the period have spent in your store so far, on average, as Shopify counts a customer's spend. It grows as they come back.
Formula LTV = what they have spent so far / new customers
LTV:CAC
The lifetime value of the period's new customers against what winning each of them cost in ads, every platform and channel together.
Formula LTV:CAC = LTV / CAC
Reversal rate
The share of gross sales taken back by returns, cancellations and order edits, as Shopify's reports count sales reversals.
Formula Reversal rate = sales reversals / gross sales
Ad account figures
ROAS
Return on ad spend: the conversion value divided by the spend. 3.00 means 3 in sales for every 1 spent on ads.
Formula ROAS = conversion value / ad spend
POAS
Profit on ad spend: the conversion value at your margin before ad spend over these days, divided by the spend. Above 1 the account earns more than it costs; below 1 it loses money.
Formula POAS = conversion value × margin before ad spend / ad spend
Break-even ROAS
The ROAS at which an account's sales just pay for its ads: 1 divided by your margin before ad spend. It is the same for every account, as the platforms do not know what each sale cost you.
Formula Break-even ROAS = 1 / margin before ad spend