# Metrics Explained

In this article, you'll find a list of metrics used in TrueProfit Profit Analytics and Product Analytics. Quickly search for the term you want using Ctrl+F.

The final money you receive from customers, also known as Total sales in Shopify.

Revenue = Gross Sales – Discounts – Refunds + Taxes + Shipping Charges

Note: taxes and shipping are the money you charge customers.

The sum of all expenses occurring during the operation of your business.

Total cost = Cost of goods sold + Handling Fees + Shipping Cost + Ad Spend + Transaction Fees + Custom Spend

The amount of money you gain after all costs are deducted.

Net profit = Revenue + Tips + Gift Card Sales - Total cost - Taxes

The measurement of your business's profitability. The higher the number, the more profitable the company. A low profit margin might indicate a problem that is interfering with profitability potential such as unnecessarily high expenses.

Net profit margin = Net profit / Revenue

Total cost for advertising pulled from Facebook and Google Ads.

The average amount of ad spend to acquire an order.

Ad spend / Total orders

The average amount of money a customer spend in one order. Higher AOV often means higher profit margin, as most cost per order is fixed whether someone buys more or less.

Average Order Value = Revenue / Total Orders

The average profit you earn from one order.

Average order profit = Profit / Total orders

Cost of Goods Sold (COGS) is how much the products cost you, as opposed to how much you charge customers (Sales price). For most dropshippers, COGS is the product prices you pay on AliExpress or CJ Dropshipping.

Shipping costs are the costs you need to pay in order to deliver your products. This differs from Shipping charges (see below)

The shipping charge is what your customers pay for shipping, whereas Shipping Cost is what you pay. This is set up in Shopify and automatically pulled into True Profit.

Other expenses such as software/app, influencers, rents, salary, Shopify plan, taxes.

The amount of money that your payment gateways (Paypal, Stripe, etc.) and Shopify charge for each of your order.

Taxes are what your customers are obliged to pay when checking out on your Shopify store. The default sale tax rates are calculated and updated regularly by Shopify. True Profit displays these tax data pulled in from your Shopify Shop.

Online tipping enables your customers to add a tip to their order on the payment page when they check out. Tips are calculated either by a percentage of the order total or by a custom amount. This is set up in Shopify and automatically pulled into True Profit.

This is the amount that covers all expenses regarding fulfillment, such as warehouse storage cost, shipment cost, and packing cost. If Handling fees are not added to True Profit, the default value of a product will be zero.

Return on ad spend is is a metric that measures the amount of revenue your business earns for each dollar it spends on advertising platform.

Revenue/Total Ads Spend

Profit on Ad Spend is a metric that measures the amount of profit your business earns for each dollar it spends on advertising platform.

Gross Profit/ Total Ad Spend

The average number of times your customers make a purchase in a certain period.

Total Orders / Total Customers

The percentage of new customers in total orders in the certain period.

Number of New Customers / Total Orders

This metric measures the amount of revenue from new customers your business earns for each dollar it spends on advertising platform.

Total New Customers Revenue/Total Ad Spend

The maximum cost to acquire an order so you can break even or start making profit.

BEP = (Sale Price - Total Cost) * UPT

Note:

CPP: Cost per Purchase or the Cost to acquire an order.

Total Cost: Total Cost of selling a product.

UPT: Units per Transaction. See number 11 below.

Cost = Shipping Cost + Transaction Fees + Cost of goods sold - Taxes

Revenue = Total Price - Taxes

The minimum ROAS (Return On Ad Spend) on Facebook you have to earn so you can break even or start making profit.

BER = (Sale Price * UPT) / BEP

The total amount of money that the product has sold.

The amount of money you've earned from selling a product.

Profit = Revenue - Total Cost

COST = COGS + Shipping Cost + Transaction Fees

The number of pageviews that the product received.

The number of times the product was added to the shopping cart.

The percentage of sessions where the product was added to the shopping cart.

ATC rate = ATC / Views

The total number of orders of a product.

The total number of individual items sold of a product.

The average items per order. If no order is made, this value will equal to 1.

UPT = Total Units Sold / Total Orders

The percentage of sessions where the product was purchased.

Conversion rate = Purchases / Views

Purchases: The number of times the product was purchased.

Repurchase Rate is the percentage rate of customers having placed another order within a certain period of time.

Repurchase Rate = Number of second-time-purchase customers / Number of customers

Lifetime Value (LTV) is the average revenue that a customer will generate throughout their lifetime as a paying customer.

LTV = Total Revenue / Total Customers

Customer Acquisition Cost (CAC) is the total cost of sales and marketing efforts that are needed to acquire a customer.

CAC = Total Ad Spend / Number of Acquired Customers

This ratio shows the Lifetime Value of a customer as compared to the cost of acquiring them. Depending on your business, you can interpret this ratio to mean that you may be spending too much on sales and marketing or not.

A greater ratio may be considered a good sign, meaning more value is creating (further analysis is required).

On the other hand, also watch out for more room to expand your sales and marketing activities when the ratio is too great.

## A. Metrics in Profit Analytics

#### 1. Revenue

The final money you receive from customers, also known as Total sales in Shopify.

Revenue = Gross Sales – Discounts – Refunds + Taxes + Shipping Charges

Note: taxes and shipping are the money you charge customers.

#### 2. Total cost

The sum of all expenses occurring during the operation of your business.

Total cost = Cost of goods sold + Handling Fees + Shipping Cost + Ad Spend + Transaction Fees + Custom Spend

#### 3. Net profit

The amount of money you gain after all costs are deducted.

Net profit = Revenue + Tips + Gift Card Sales - Total cost - Taxes

#### 4. Net profit margin (%)

The measurement of your business's profitability. The higher the number, the more profitable the company. A low profit margin might indicate a problem that is interfering with profitability potential such as unnecessarily high expenses.

Net profit margin = Net profit / Revenue

#### 5. Ad spend

Total cost for advertising pulled from Facebook and Google Ads.

#### 6. Ad spend per order

The average amount of ad spend to acquire an order.

Ad spend / Total orders

#### 7. Average order value (AOV)

The average amount of money a customer spend in one order. Higher AOV often means higher profit margin, as most cost per order is fixed whether someone buys more or less.

Average Order Value = Revenue / Total Orders

#### 8. Average order profit

The average profit you earn from one order.

Average order profit = Profit / Total orders

#### 9. Cost of Goods Sold

Cost of Goods Sold (COGS) is how much the products cost you, as opposed to how much you charge customers (Sales price). For most dropshippers, COGS is the product prices you pay on AliExpress or CJ Dropshipping.

#### 10. Shipping costs

Shipping costs are the costs you need to pay in order to deliver your products. This differs from Shipping charges (see below)

#### 11. Shipping charged

The shipping charge is what your customers pay for shipping, whereas Shipping Cost is what you pay. This is set up in Shopify and automatically pulled into True Profit.

#### 12. Custom cost

Other expenses such as software/app, influencers, rents, salary, Shopify plan, taxes.

#### 13. Transaction fee

The amount of money that your payment gateways (Paypal, Stripe, etc.) and Shopify charge for each of your order.

#### 14. Taxes

Taxes are what your customers are obliged to pay when checking out on your Shopify store. The default sale tax rates are calculated and updated regularly by Shopify. True Profit displays these tax data pulled in from your Shopify Shop.

#### 15. Tips

Online tipping enables your customers to add a tip to their order on the payment page when they check out. Tips are calculated either by a percentage of the order total or by a custom amount. This is set up in Shopify and automatically pulled into True Profit.

#### 16. Handling Fees

This is the amount that covers all expenses regarding fulfillment, such as warehouse storage cost, shipment cost, and packing cost. If Handling fees are not added to True Profit, the default value of a product will be zero.

#### 17. ROAS

Return on ad spend is is a metric that measures the amount of revenue your business earns for each dollar it spends on advertising platform.

Revenue/Total Ads Spend

#### 18. POAS

Profit on Ad Spend is a metric that measures the amount of profit your business earns for each dollar it spends on advertising platform.

Gross Profit/ Total Ad Spend

#### 19. Purchase Frequency

The average number of times your customers make a purchase in a certain period.

Total Orders / Total Customers

#### 20. New Customers Per Order

The percentage of new customers in total orders in the certain period.

Number of New Customers / Total Orders

#### 21. NcROAS

This metric measures the amount of revenue from new customers your business earns for each dollar it spends on advertising platform.

Total New Customers Revenue/Total Ad Spend

## B. Metrics in Product Analytics

### 1. BEP (Break-even Cost per Purchase)

The maximum cost to acquire an order so you can break even or start making profit.

BEP = (Sale Price - Total Cost) * UPT

Note:

CPP: Cost per Purchase or the Cost to acquire an order.

Total Cost: Total Cost of selling a product.

UPT: Units per Transaction. See number 11 below.

Cost = Shipping Cost + Transaction Fees + Cost of goods sold - Taxes

Revenue = Total Price - Taxes

### 2. BER (Break-even Return On Ad Spend)

The minimum ROAS (Return On Ad Spend) on Facebook you have to earn so you can break even or start making profit.

BER = (Sale Price * UPT) / BEP

### 3. Revenue

The total amount of money that the product has sold.

### 4. Profit

The amount of money you've earned from selling a product.

Profit = Revenue - Total Cost

### 5. COST

COST = COGS + Shipping Cost + Transaction Fees

### 6. Views

The number of pageviews that the product received.

### 7. ATC (Adds to cart)

The number of times the product was added to the shopping cart.

### 8. ATC rate (Add-to-cart rate)

The percentage of sessions where the product was added to the shopping cart.

ATC rate = ATC / Views

### 9. Orders

The total number of orders of a product.

### 10. Units Sold

The total number of individual items sold of a product.

### 11. UPT (Units per Transaction)

The average items per order. If no order is made, this value will equal to 1.

UPT = Total Units Sold / Total Orders

### 12. Conversion rate

The percentage of sessions where the product was purchased.

Conversion rate = Purchases / Views

Purchases: The number of times the product was purchased.

## C. Metrics in Lifetime Value

#### 1. Repurchase Rate

Repurchase Rate is the percentage rate of customers having placed another order within a certain period of time.

Repurchase Rate = Number of second-time-purchase customers / Number of customers

#### 2. LTV

Lifetime Value (LTV) is the average revenue that a customer will generate throughout their lifetime as a paying customer.

LTV = Total Revenue / Total Customers

#### 3. CAC

Customer Acquisition Cost (CAC) is the total cost of sales and marketing efforts that are needed to acquire a customer.

CAC = Total Ad Spend / Number of Acquired Customers

#### 4. LTV:CAC ratio

This ratio shows the Lifetime Value of a customer as compared to the cost of acquiring them. Depending on your business, you can interpret this ratio to mean that you may be spending too much on sales and marketing or not.

A greater ratio may be considered a good sign, meaning more value is creating (further analysis is required).

On the other hand, also watch out for more room to expand your sales and marketing activities when the ratio is too great.

Updated on: 16/01/2023

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