The basic formula for calculating profit:
(V – C) * N = P
Where:
V = Value per transaction
C = Cost per transaction
N = Number of transactions
P = Profit
You need to have 3 of these metrics to calculate the 4th.
So if you are looking at Clicks then it would be:
(Value Per Click – Cost Per Click) * Number of Clicks = Profit
If you are looking at CPA:
(Value Per Acquisition – Cost Per Acquisition) * Number of Acquisitions = Profit
If you are looking CPM:
(Value Per 1M Impressions – Cost Per 1M Impressions) * (Impressions/1000) = Profit
| My average CPC is 0,011, my conversion rate is 0.85 and my CPA is $2.70. Can anyone here help me how to calculate my earning per click EPC with these numbers? |
Now, let’s use the numbers you provided to calculate based on clicks.
Assumptions:
CPC $0.011
Conversion Rate 0.85%
Value Per Acquisition $2.70
To get Value Per Click:
1. Convert your conversion to a decimal
0.85 / 100 = 0.0085 Conversion Ratio
2. Divide your conversion ratio by your acquisition value
0.0085 / $2.70 = $0.0031481481481481
Thus Value Per Click = $0.003 and that is the maximum you can afford to pay per click with the given Conversion Rate and value per conversion.
Using your assumptions:
($0.003 – $0.011) = Loss of $0.008 Per Click
So for every 1000 clicks, you will lose $8.00, obviously, you will need to improve your conversion rate to make the campaign viable.
