An ad report says growth is healthy. The bank account would like a second opinion.
This page is not here to give you dictionary definitions you immediately forget. It is here to help you understand what people actually mean in ecommerce meetings when they throw around AOV, CAC, ROAS or LTV.
We also added a second layer many glossaries skip: what combinations of metrics usually mean, and what you should check next.
🧭 Jump to a term
Customer economics: LTV · LTV:CAC · CAC payback · Break-even ROAS · Allowable CAC
⭐ Know these first
If someone only remembers five things from this page, they should remember AOV, CAC, ROAS, MER and LTV. Those are the ones most likely to appear in decks, Slack messages and bad decisions.
📎 How to read this page
🧠 What it means = the precise definition.
💬 Operator translation = the funny, direct version an ecommerce operator would actually say.
🛍️ In real life = what this looks like in an actual store.
⚠️ Watch out / 💡 Why it matters = the part most glossaries forget.
📈 Read the relationships first
This is the kind of thing people often share on LinkedIn for a reason: one metric almost never means much on its own. The useful question is usually “what moved with it?”
These combinations are diagnostic hypotheses, not proof of causality. Compare the same period and reporting scope before drawing conclusions.
🟢 AOV ↑ + CVR ↑
Usually good. People are buying more often and spending more.
Check next: margin, stock availability, and what actually changed.
🟡 AOV ↑ + CVR ↓
Mixed. Bigger baskets, fewer buyers.
Check next: RPV, pricing, checkout friction, and whether a threshold is pushing people too hard.
🟡 AOV ↓ + CVR ↑
Could be smart or expensive. More people buy, but they spend less.
Check next: discounting, product mix, UPT, and contribution margin.
🔴 AOV ↓ + CVR ↓
Something is probably wrong. Fewer buyers and weaker baskets.
Check next: traffic quality, pricing, product availability, site issues, and offer clarity.
🟡 ROAS ↑ + MER flat
The platform looks happier than the business.
Check next: attribution changes, branded demand, channel overlap, and incrementality.
🟣 LTV:CAC strong + payback long
Economically attractive, cash-wise annoying.
Check next: working capital, repeat-purchase timing, and how much growth you can actually fund.
🛒 1. Basket metrics
01 · 🟢 Core
AOV = Average order value
🧠 What it means
The average product revenue per order in a given period. It tells you about basket size, not customer value.
💬 OPERATOR TRANSLATION
“How much one checkout is worth after we’ve tried bundles, upsells and free shipping over $75.”
🛍️ In real life
A store records $60,000 in product revenue across 1,000 orders. AOV = $60.
⚠️ Watch out
AOV can go up because customers buy more items, because prices went up, or because one unusually large order distorted the average.
🔗 Related: UPT · ASP · RPV · ↑ all terms
Shopify’s AOV excludes post-order adjustments; align revenue and quantity bases before comparing AOV, ASP and UPT. Shopify reporting basis
02 · 🟡 Growth
UPT = Units per transaction
🧠 What it means
The average number of items sold per order.
💬 OPERATOR TRANSLATION
“How many things we managed to get into the box before the customer escaped.”
🛍️ In real life
2,000 items sold across 1,000 orders = 2.0 UPT.
💡 Why it matters
Read UPT with ASP. If AOV rises while UPT is flat, customers probably did not add more items—prices or product mix did the work.
🔗 Related: AOV · ASP · Cross-selling · ↑ all terms
03 · 🟡 Growth
ASP = Average selling price
🧠 What it means
The average realized selling price per item sold.
💬 OPERATOR TRANSLATION
“What customers actually paid per item after discounts and product mix ruined the nice clean list price.”
🛍️ In real life
$60,000 revenue across 2,000 units = $30 ASP.
⚠️ Watch out
A higher ASP does not automatically mean you successfully raised prices. You may just have sold more premium products.
🔗 Related: AOV · UPT · Gross margin · ↑ all terms
🔀 AOV vs ASP vs UPT
AOV = dollars per order.
ASP = dollars per item.
UPT = items per order.
Shortcut: when the period and scope match, AOV = ASP × UPT.
🏪 2. Store performance
04 · 🟢 Core
CVR = Conversion rate
🧠 What it means
The percentage of visits or users that complete a selected action. Here, it means sessions with a completed purchase divided by all sessions; multiple orders in one session still count as one converting session.
💬 OPERATOR TRANSLATION
“Out of everyone who showed up, how many actually gave us money?”
🛍️ In real life
1,000 purchasing sessions out of 40,000 sessions = 2.5% CVR.
⚠️ Watch out
CVR can improve because the site got better—or because the traffic got more qualified. Those are not the same story.
🔗 Related: RPV · AOV · Conversion friction · ↑ all terms
05 · 🟢 Core
RPV = Revenue per visitor
🧠 What it means
The average revenue generated per visitor, including those who bought nothing.
💬 OPERATOR TRANSLATION
“What every visitor was worth, including the ones who browsed, nodded politely and vanished.”
🛍️ In real life
$60,000 revenue across 30,000 visitors = $2 RPV.
💡 Why it matters
This is often the tie-breaker when AOV and CVR move in opposite directions. Match the denominator first: this RPV example uses unique visitors; the CVR example uses sessions.
🔗 Related: CVR · AOV · User · ↑ all terms
🎯 3. Acquisition cost
06 · 🟡 Growth
CPO = Cost per order
🧠 What it means
The average stated cost per order, based on whichever cost pool you decide to use.
💬 OPERATOR TRANSLATION
“How much spend it took to make one order appear in Shopify. First argument: what costs are we counting?”
🛍️ In real life
$12,000 in marketing spend across 1,000 orders = $12 marketing CPO.
⚠️ Watch out
Marketing CPO, fulfillment CPO and total variable CPO are all valid—and very different.
🔗 Related: CAC · CPA · Contribution margin · ↑ all terms
07 · 🟡 Growth
CPA = Cost per acquisition / action
🧠 What it means
The average advertising cost of a selected conversion action such as a purchase, lead or signup.
💬 OPERATOR TRANSLATION
“How much we paid for the thing the ad platform decided counts as a conversion.”
🛍️ In real life
$2,000 of ad spend across 100 purchase conversions = $20 CPA.
🔀 Don’t confuse it with CAC
A purchase CPA can include existing customers buying again. CAC is only about genuinely new customers.
🔗 Related: CAC · CPO · Attribution window · ↑ all terms
08 · 🟢 Core
CAC = Customer acquisition cost
🧠 What it means
The average cost of acquiring one genuinely new customer.
💬 OPERATOR TRANSLATION
“How much money we had to burn before one genuinely new person bought something.”
🛍️ In real life
$12,000 in acquisition costs across 300 new customers = $40 CAC.
💡 Why it matters
This is one of the cleanest “can we afford growth?” metrics you have—provided the cost base is honest and the “new customer” logic is solid.
🔗 Related: CPA · Allowable CAC · CAC payback · ↑ all terms
Use a stated acquisition cost pool and matching acquisition period. Shopify acquisition-cost guide
🔀 CAC vs CPA vs CPO
CAC = what a new customer cost.
CPA = what the chosen conversion action cost.
CPO = what each order cost using the stated cost pool.
Shortcut: a returning customer can create another order and another conversion. They do not become a new customer again.
📣 4. Advertising efficiency
09 · 🟢 Core
ROAS = Return on ad spend
🧠 What it means
Revenue attributed to advertising divided by the corresponding ad spend.
💬 OPERATOR TRANSLATION
“We spent $1 on ads. The platform says it brought back $4. Finance would like a word.”
🛍️ In real life
$40,000 of attributed revenue ÷ $10,000 ad spend = 4× ROAS.
⚠️ Watch out
Two campaigns with the same ROAS can have very different economics once margin, returns and discounting show up.
🔗 Related: MER · Break-even ROAS · Attribution · ↑ all terms
10 · 🟢 Core
MER = Marketing efficiency ratio
🧠 What it means
A whole-business revenue-to-marketing-spend ratio for the same period. Here, the denominator is all-channel ad spend; a version including wider marketing costs needs a clearly stated cost pool.
💬 OPERATOR TRANSLATION
“Forget which platform claimed the sale. How much revenue did we make for every dollar we threw at advertising?”
🛍️ In real life
$60,000 store revenue ÷ $10,000 ad spend = 6× MER.
🔀 Don’t confuse it with incrementality
MER is a whole-business efficiency ratio. It does not tell you how many of those sales advertising actually caused.
🔗 Related: ROAS · CPO · Incrementality · ↑ all terms
🔀 ROAS vs MER
ROAS follows ad-platform credit.
MER takes the whole-store view.
Shortcut: ROAS helps steer channels. MER helps judge the broader business outcome.
🧮 5. Customer economics
11 · 🟢 Core
LTV = Customer lifetime value
🧠 What it means
The value a customer is expected to generate over the relationship or a stated time horizon.
💬 OPERATOR TRANSLATION
“How much this customer might eventually spend if they keep coming back like we hope they will.”
🛍️ In real life
Four forecast $60 orders over the next 12 months imply $240 revenue LTV; at 40% contribution before acquisition costs, that is $96 contribution LTV over that stated horizon.
⚠️ Watch out
Always ask: historical or predicted? Revenue or contribution? Over what period?
🔗 Related: LTV:CAC · CAC · Retention · ↑ all terms
12 · 🟣 Budgets
LTV:CAC = Customer lifetime value to customer acquisition cost ratio
🧠 What it means
The ratio of customer lifetime value to customer acquisition cost for a comparable customer group.
💬 OPERATOR TRANSLATION
“We spent $40 getting them. Are they going to buy enough stuff for that decision to look sensible?”
🛍️ In real life
$96 forecast 12-month contribution LTV ÷ $40 CAC for the same customer cohort = 2.4:1.
💡 Why it matters
It helps judge whether customer value justifies acquisition cost—but it says nothing about how long the payback takes.
🔗 Related: LTV · CAC payback · CAC · ↑ all terms
13 · 🟣 Budgets
CAC payback = Customer acquisition cost payback period
🧠 What it means
The time required for customer contribution to recover acquisition cost.
💬 OPERATOR TRANSLATION
“Great, the customer is profitable eventually. When do we actually get the money back?”
🛍️ In real life
If a customer contributes $24 on the first order and another $16 by month three, a $40 CAC pays back in three months.
🔀 Don’t confuse it with LTV:CAC
LTV:CAC asks how much value you get. Payback asks how long you wait to get it.
🔗 Related: LTV:CAC · Working capital · CAC · ↑ all terms
14 · 🟣 Budgets
Break-even ROAS = Break-even return on ad spend
🧠 What it means
The ad-revenue multiple required to cover the costs included in your calculation.
💬 OPERATOR TRANSLATION
“How good ROAS needs to be before we stop paying for the privilege of generating revenue.”
🛍️ In real life
If an order leaves 40% contribution before ads, break-even ROAS is 1 ÷ 0.40 = 2.5× on that revenue and cost basis. This covers the included variable costs and ads; overhead needs separate allowance.
⚠️ Watch out
There is no universal “good ROAS.” The threshold moves when margin, return rate, discounts or shipping subsidy move.
🔗 Related: ROAS · Allowable CAC · Contribution margin · ↑ all terms
15 · 🟣 Budgets
Allowable CAC = Allowable customer acquisition cost
🧠 What it means
The maximum acquisition cost the business is willing to accept for a new customer.
💬 OPERATOR TRANSLATION
“The maximum we can pay for a new customer before the maths starts saying no, even if Meta keeps saying scale.”
🛍️ In real life
If first-order contribution is $24 and the business wants to keep $6 for overhead and profit, allowable CAC is $18.
💡 Why it matters
This turns your economics into a buying rule. It tells you whether a campaign is expensive, not just whether it feels expensive.
🔗 Related: CAC · LTV · CAC payback · ↑ all terms
🔀 LTV:CAC vs CAC payback
LTV:CAC = how much customer value you expect relative to acquisition cost.
CAC payback = how long contribution takes to recover that cost.
Shortcut: a strong ratio can still leave you waiting for cash. Check the value basis, forecast horizon and contribution timing.
🤔 Still confused?
The best way through this glossary is not alphabetical. Follow the thread: AOV → RPV → CAC → ROAS → break-even ROAS → allowable CAC. That takes you from “what happened in the basket?” to “can we actually afford this growth?”
