The basic formula for calculating profit:
(V – C) * N = P
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.
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.