I’ve just been asked the question – “I make £10 profit on each sale, and I’m assuming a 5% conversion rate – so what max pay per click should I pay?” (Obviously this works for £10, $10,‚¬10, or whatever currency you buy traffic in).

Before I go any further – how sure are you on that conversion rate?

If you’re assuming a conversion instead of knowing your conversion from conversion tracking – it would be wise to make an assumption much lower than 5% – in fact, in my opinion the best sales conversion to assume if you have to assume, is 0.25% – which is far more realistic with most campaigns.

Anyway – assuming that you are actually going to get a 5% conversion (if you are, congrats, that’s pretty good!) , then that means 20 visits makes you one sale. 20 x 5% = 1.

If your profit per sale is £10 – then how much you can pay per click, depends on how much profit you want to make once you’ve taken into account the cost of sale.

If you’re happy with making £5 per sale after the cost of advertising – then this gives you £5 you can spend on making each sale – if your conversion is 5% this means 20 visits for £5, which means 5.00 / 20 = £0.25 per click is your max cost per click.

Some people don’t want to make any profit after advertising costs, when they start a campaign – instead they just want a break even campaign to pull in new customers, so they can profit off the back end from up-selling, and repeat business.

If this is the case, you have £10 per

I’ve just been asked the question – “I make £10 profit on each sale, and I’m assuming a 5% conversion rate – so what max pay per click should I pay?”  (Obviously this works for £10, $10,‚¬10, or whatever currency you buy traffic in).

Before I go any further – how sure are you on that conversion rate?

If you’re assuming a conversion instead of knowing your conversion from conversion tracking – it would be wise to make an assumption much lower than 5% – in fact, in my opinion the best sales conversion to assume if you have to assume, is 0.25% – which is far more realistic with most campaigns.

Anyway – assuming that you are actually going to get a 5% conversion (if you are, congrats, that’s pretty good!) , then that means 20 visits makes you one sale.  20 x 5% = 1.

If your profit per sale is £10 – then how much you can pay per click, depends on how much profit you want to make once you’ve taken into account the cost of sale.

If you’re happy with making £5 per sale after the cost of advertising – then this gives you £5 you can spend on making each sale – if your conversion is 5% this means 20 visits for £5, which means 5.00 / 20 = £0.25 per click is your max cost per click.

Some people don’t want to make any profit after advertising costs, when they start a campaign – instead they just want a break even campaign to pull in new customers, so they can profit off the back end from up-selling, and repeat business.

If this is the case, you have £10 per sale, which means you can spend up to £0.50 per click.

Obviously you can use the same calculation to work out your max cost per click if your profit is £2, £20, £40, and if your conversion rate is 1%, 2%, whatever the case may be.

The one thing I would always recommend is that you don’t assume your conversion rate – put your main efforts at first, into getting conversion tracking set up properly so you know your exact conversion rates – then you canwork out exactly what your max cost per click can be depending on your profit per sale & how much profit you want to make after the cost of advertising.

So there you go – hope this was helpful. If you need an SEO consultant, talk to me, if you need a PPC expert, I’m not the guy to speak to – I’m experienced to a certain degree with PPC but it’s not my forte’, so just do some searching for PPC specialists  – there are some really clever PPC people out there.

But as long as you know your conversion rate, and you do this calulation right – you shouldn’t lose your shirt on PPC marketing – however working with a PPC specialist may help you to dramatically increase your return on investment.ale, which means you can spend up to £0.50 per click.

Obviously you can use the same calculation to work out your max cost per click if your profit is £2, £20, £40, and if your conversion rate is 1%, 2%, whatever the case may be.

The one thing I would always recommend is that you don’t assume your conversion rate – put your main efforts at first, into getting conversion tracking set up properly so you know your exact conversion rates – then you canwork out exactly what your max cost per click can be depending on your profit per sale & how much profit you want to make after the cost of advertising.

So there you go – hope this was helpful. If you need an SEO consultant, talk to me, if you need a PPC expert, I’m not the guy to speak to – I’m experienced to a certain degree with PPC but it’s not my forte’, so just do some searching for PPC specialists – there are some really clever PPC people out there.

But as long as you know your conversion rate, and you do this calulation right – you shouldn’t lose your shirt on PPC marketing – however working with a PPC specialist may help you to dramatically increase your return on investment.

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