How do you calculate ROI in ecommerce?

ROI = (profit − cost) ÷ cost × 100. Use profit after product cost, shipping, and fees, and cost as your total ad and tool spend.

What is customer lifetime value?

The total profit you expect from a customer over the whole relationship. A simple version is average order value × orders per year × years retained × margin.

What is a good CLV to acquisition cost ratio?

Many operators look for a customer lifetime value at least three times what they pay to acquire the customer. Treat it as a rule of thumb, not a law.

Why does repeat purchase matter?

If customers buy again, you can afford a higher cost to acquire them. One-off products usually need to be profitable on the first order.

Ecommerce ROI and customer lifetime value: how to calculate both

TrendMetric ResearchOct 17, 20261 min read

ROI looks backward: did this campaign make money? Customer lifetime value (CLV) looks forward: how much is a customer worth to me? You need both to decide how much to spend on ads.

ROI

ROI = (profit − cost) ÷ cost × 100. If you spent $1,000 and earned $1,800 in profit before ad cost, your net gain is $800 and ROI is 80%.

Customer lifetime value

A simple CLV = average order value × orders per year × years the customer stays × margin.

Average order value: $50
Orders per year: 2
Years retained: 2
Margin: 40%
CLV = 50 × 2 × 2 × 0.40 = $80

How to use the two together

If a customer is worth $80 in profit, spending $25 to acquire them is comfortable. Spending $90 is not. For one-time products with no repeat purchase, CLV equals the first order, so your margin and break-even ROAS decide everything.

Both calculators are arithmetic on what you type. Pair them with market research so you know the product has demand before you trust the math.

Guides

Ecommerce profit margin and break-even ROAS: the formulas and a worked example

Use cases

Dropshipping market research: a five-step method before you spend on ads