[MUSIC PLAYING] Now, we are going to Zoom in on the revenue breakdown chart showed in the previous chapter. And we are going to see what the right formula to calculate the revenue of an e-commerce business on average. Basically, if you multiply conversion rate times frequency times average order value times traffic, that's how you calculate the revenue of an e-commerce business.
Now let's zoom in, and see what is going to happen on an average e-commerce with 1,000 visitors per month. Let's see here. Let's estimate that you have, in this case, 10,000 visits per month, a conversion rate of 2%, average order value of $100, frequency of 1, which means that basically the customer would chase only once from your store.
Your revenue per month is around $20,000. OK. Now let's do this. Let's keep the visits the same. So let's keep 10,000 visits per month. But let's increase each KPIs by 30% So conversion rate will increase to 2.6%. Average order value around the 130. Frequency is likely more so to 1.3. Well, you basically, congratulations, just doubled your revenue.
$44,000 per month. Isn't that beautiful? Basically, by optimizing by 30% each KPI you double your revenue.